A general equilibrium model of a production economy with asset markets
AbstractIn this paper, a general equilibrium model of a monetary production economy is presented. The model is characterized by three classes of agents: a representative firm, heterogeneous households, and the government. Two markets (i.e., a labour market and a goods market, are considered) and two assets are traded in exchange of money, namely, government bonds and equities. Households provide the labour force and decide on consumption and savings, whereas the firm provides consumption goods and demands labour. The government receives taxes from households and pays interests on debt. The Walrasian equilibrium is derived analytically. The dynamics through quantity constrained equilibria out from the Walrasian equilibrium is also studied by means of computer simulations.
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Bibliographic InfoArticle provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.
Volume (Year): 370 (2006)
Issue (Month): 1 ()
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Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/
Heterogeneous agents; General equilibrium; Financial markets and the macroeconomy; Computer simulations;
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