IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v68y2008i3-4p525-552.html
   My bibliography  Save this article

On the disequilibrium dynamics of sequential monetary economies

Author

Listed:
  • van der Hoog, Sander

Abstract

The purpose of this paper is to study the dynamic behavior of a sequential monetary exchange economy. Transactions take place sequentially against non-equilibrium prices, there is quantity rationing, and credit or cash are the only means of exchange. Agents have optimistic or pessimistic expectations about quantity constraints that represent their beliefs about future trading opportunities. In the credit model the agents incur debts along the transition path towards equilibrium, while in the cash-in-advance model convergence takes place without the occurrence of any debts or claims. The credit mechanism is shown to act as a 'soft' correction mechanism on credit fluctuations, while the cash-in-advance constraint acts as a 'hard' negative feedback effect driving the prices back towards a neighborhood of a monetary cash-in-advance equilibrium.

Suggested Citation

  • van der Hoog, Sander, 2008. "On the disequilibrium dynamics of sequential monetary economies," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 525-552, December.
    • Handle: RePEc:eee:jeborg:v:68:y:2008:i:3-4:p:525-552
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167-2681(08)00132-7
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean-Pascal Benassy, 1975. "Neo-Keynesian Disequilibrium Theory in a Monetary Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(4), pages 503-523.
    2. Robert L. Axtell, 2000. "Effect of Interaction Topology and Activation Regime in Several Multi-Agent Systems," Working Papers 00-07-039, Santa Fe Institute.
    3. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
    4. Clower, Robert & Leijonhufvud, Axel, 1975. "The Coordination of Economic Activities: A Keynesian Perspective," American Economic Review, American Economic Association, vol. 65(2), pages 182-188, May.
    5. Green, Jerry, 1980. "On the Theory of Effective Demand," Economic Journal, Royal Economic Society, vol. 90(358), pages 341-353, June.
    6. Robert Axtell, 2005. "The Complexity of Exchange," Economic Journal, Royal Economic Society, vol. 115(504), pages 193-210, June.
    7. Weddepohl, Claus, 1995. "A cautious price adjustment mechanism: Chaotic behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 27(2), pages 293-300, July.
    8. Zappia, Carlo, 2001. "Equilibrium and Disequilibrium Dynamics in the 1930s," Journal of the History of Economic Thought, Cambridge University Press, vol. 23(1), pages 55-75, March.
    9. Saari, Donald G, 1985. "Iterative Price Mechanisms," Econometrica, Econometric Society, vol. 53(5), pages 1117-1131, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lengnick, Matthias & Krug, Sebastian & Wohltmann, Hans-Werner, 2013. "Money creation and financial instability: An agent-based credit network approach," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-44.
    2. Robert Jump, 2014. "Animal spirits and unemployment: a disequilibrium analysis," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(2), pages 255-274, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. van der Laan, G. & Talman, A.J.J., 2002. "Dynamic Adjustment of Supply Constrained Disequilibria to Walrasian Equilibrium," Other publications TiSEM 8c5d443d-92c8-4e82-bcef-3, Tilburg University, School of Economics and Management.
    2. Goeree, Jacob K. & Hommes, Cars & Weddepohl, Claus, 1998. "Stability and complex dynamics in a discrete tatonnement model," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 395-410, January.
    3. Gilányi, Zsolt, 2008. "Az uralkodó pénzelmélet alapproblémái - a készpénzfedezeti korlátok problémájáról [Underlying problems with the current theory of money - the problem of cash-cover limits]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 136-148.
    4. Colombo, Luca & Weinrich, Gerd, 2003. "The Phillips curve as a long-run phenomenon in a macroeconomic model with complex dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 1-26, October.
    5. Ahmad K. Naimzada & Serena Sordi, 2018. "On controlling chaos in a discrete†time Walrasian tâtonnement process," Metroeconomica, Wiley Blackwell, vol. 69(1), pages 178-194, February.
    6. Edoardo Gaffeo & Mauro Gallegati & Umberto Gostoli, 2015. "An agent-based “proof of principle” for Walrasian macroeconomic theory," Computational and Mathematical Organization Theory, Springer, vol. 21(2), pages 150-183, June.
    7. Cavalli, Fausto & Naimzada, Ahmad, 2015. "A tâtonnement process with fading memory, stabilization and optimal speed of convergence," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 116-129.
    8. Guy Laroque, 1991. "Inventories and the Fixprice Method," International Economic Association Series, in: Lionel W. McKenzie & Stefano Zamagni (ed.), Value and Capital: Fifty Years Later, chapter 8, pages 205-231, Palgrave Macmillan.
    9. John D. Hey & Daniela Di Cagno, 2018. "Does money impede convergence?," World Scientific Book Chapters, in: Experiments in Economics Decision Making and Markets, chapter 18, pages 391-408, World Scientific Publishing Co. Pte. Ltd..
    10. Michel De Vroey, 2004. "Théorie du déséquilibre et chômage involontaire. Un examen critique," Revue économique, Presses de Sciences-Po, vol. 55(4), pages 647-668.
    11. Georg Winckler, 1988. "Neustrukturierung der keynesianischen Theorie?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 14(2), pages 183-195.
    12. Kaizoji, Taisei, 2010. "Multiple equilibria and chaos in a discrete tâtonnement process," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 597-599, December.
    13. Georg Winckler, 1988. "Neustrukturierung der keynesianischen Theorie?," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 14(2), pages 183-196.
    14. Tuinstra, Jan, 2000. "A discrete and symmetric price adjustment process on the simplex," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 881-907, June.
    15. Tuinstra, Jan, 1997. "A price adjustment process with symmetry," Economics Letters, Elsevier, vol. 57(3), pages 297-303, December.
    16. Santiago J. Gangotena, 2017. "Dynamic coordinating non-equilibrium," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 30(1), pages 51-82, March.
    17. Céline Rochon & Herakles Polemarchakis, 2006. "Debt, liquidity and dynamics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(1), pages 179-211, January.
    18. Ogawa, Shogo, 2021. "One Suggestion for Microfoundation of Non-Walrasian Disequilibrium Macroeconomics: Matching Theory with Dual Decision," MPRA Paper 106636, University Library of Munich, Germany.
    19. Ahmad K. Naimzada & Serena Sordi, 2016. "On controlling chaos in a discrete tâtonnement process," Department of Economics University of Siena 729, Department of Economics, University of Siena.
    20. Huang, Weihong, 2001. "Statistical dynamics and Walras' law," Journal of Economic Behavior & Organization, Elsevier, vol. 46(1), pages 57-71, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:68:y:2008:i:3-4:p:525-552. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.