Title: Testable implications of general equilibrium models: an integer programming approach
Authors: Cherchye, Laurens ×
Demuynck, Thomas
De Rock, Bram #
Issue Date: 2011
Series Title: Journal of Mathematical Economics vol:47 issue:4-5 pages:564-575
Abstract: Focusing on the testable revealed preference restrictions on the equilibrium manifold, we show that the rationalizability problem is NP-complete. Subsequently, we present a mixed integer programming (MIP) approach to characterize the testable implications of general equilibrium models. Attractively, this MIP approach naturally applies to settings with any number of observations and any number of agents. This is in contrast with existing approaches in the literature. We also demonstrate the versatility of our MIP approach in terms of dealing with alternative types of assignable information. Finally, we illustrate our methodology on a data set drawn from the US economy. In this application, an important focus is on the discriminatory power of the rationalizability tests under study.
ISSN: 0304-4068
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Public Economics, Leuven
Department of Economics, Leuven - miscellaneous
Faculty of Business and Economics, Campus Kulak Kortrijk – miscellaneous
Mathematics, Campus Kulak Kortrijk
× corresponding author
# (joint) last author

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