Walras-Keynes equilibria coordination and macroeconomics
AbstractIn decentralised market economies, supply-constrained equilibria may persist as coordination failures, sustained but not caused by price rigidities. This feature may be arbitrarily severe, even at prices com- patible with competitive equilibrium. The supply-constraints may originate in rational expectations. Some implications for macroeco- nomics are drawn. The possibility of coordination failures explains why organised labour may resist wage flexibility. These features are il- lustrated in elementary macroeconomic prototypes, like RBC or Barro- Grossman-Malinvaud prototypes.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997051.
Date of creation: 24 Jul 1997
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coordination failures; supply constraints; price rigidities; macroeconomics.;
Other versions of this item:
- Dreze, Jacques H., 1997. "Walras--Keynes equilibria coordination and macroeconomics," European Economic Review, Elsevier, vol. 41(9), pages 1735-1762, December.
- E00 - Macroeconomics and Monetary Economics - - General - - - General
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