ECONOMIC GROWTH CENTER

                        YALE UNIVERSITY

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                CENTER DISCUSSION PAPER NO.  782



           THREE LECTURES ON THE WALRASIAN HYPOTHESES
                     FOR EXCHANGE ECONOMIES


                         Donald J.Brown

                        Yale University






                          August 1997









Note:  Center Discussion Papers are preliminary materials circulated to
       stimulate discussions and critical comments.  This is a revised
       version of the paper originally written in August 1996.


              Three Lectures on
           The Walrasian Hypotheses
           for Exchange Economies*

                      by

               Donald J. Brown


                   Abstract

    This paper discusses the testable implications of the Walrasian hypotheses:

 H1 Observed market demand is the sum of consumer's demands derived from utility
    maximization subject to budget constraints.

 H2 There exists an observable (locally) unique equilibrium price system such
    that the observable market demand is equal to the observable market supply
    in every market.

 H3 The observed equilibrium price system is a (locally) stable equilibrium of
    tƒtonnement price adjustment.

    The main results are the Brown Matzkin Theorem:  H1 is testable, and the
 Brown Shannon Theorem:  H2 and H3 are not testable.




Keywords: Exchange Economies, Testable Restrictions.




*The author wishes to thank the Institute Veneto di Scienze, Lettere ed Arti,
 Venezia for the opportunity to present his current research on the
 Walrasian model at the Conference on General Equilibrium Theory in Venice,
 June 1997.  I am also pleased to acknowledge the warm hospitality of the
 conference organizers Yves Balasko and Piero Gottardi.  Finally, let me
 express my appreciation to G. Ames, T. Keister, and E. Minelli for their
 editorial assistance in preparing these lectures notes. The comments of T. N.
 Srinivasan are also appreciated.