General Equilibrium Models with Rationing: The Making of a ‘European Specialty’
Abstract
Europe played a pivotal role in advancing research on General Equilibrium Models withRationing (GEMR). This paper sheds light on the origins and motivations behind this
development. Our study highlights that the emergence and evolution of GEMR can be traced
back to France and Belgium in the mid-1970s, gradually gaining momentum throughout
Europe. In our analysis, we identify three key factors that contributed to the widespread
adoption of GEMR across Europe. Firstly, GEMR presented novel research avenues in the
realms of microeconomics, macroeconomics, and econometrics, thereby capturing the attention
of scholars in these fields. Secondly, influential figures played a crucial role by not only
advocating for GEMR but also possessing the necessary institutional resources to stimulate
further research. Notably, renowned economists such as Drèze at the Center for Operations
Research and Econometrics (Belgium), Pierre-Yves Hénin at Paris I University (France),
Werner Hildenbrand at the University of Bonn (Germany), and Jean-Jacques Laffont at
Toulouse School of Economics (France) left a lasting impact on the dissemination of GEMR.
Thirdly, specific challenges faced by the continent played a significant role in driving the
utilization of GEMR. The persistent issue of unemployment in Western Europe and the
planning dynamics in Eastern Europe presented compelling reasons to explore the potential of
GEMR as a solution. By providing insights into the historical context and key influencers, this
presentation contributes to a comprehensive understanding of the development and diffusion of
GEMR across Europe.