Non-uniqueness of equilibrium

Updated: Aug 20, 2021

A situation where an economic model possesses more than one outcome that satisfies the system of equations describing equilibrium. A model may possess several isolated equilibria or it may have a continuum of equilibria. When the equilibria are isolated there is typically an odd number (an even number can occur but a slight change to the economy will restore an odd number). A continuum of equilibria can occur in economies with forward-looking behaviour.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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