In this paper we propose a new tatonnement process of short-period equilibria with rational expectations : current period prices move proportionnally to current period excess demand while future prices are formed according to the perfect foresight hypothesis. It is shown that this process is locally asymptotically stable if all goods are gross substitutes, or if the equilibriem has no trade. In general, this process differs from a tatonnement process in contingent contracts prices from a tatonnement in asset and spot market prices.
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Paper provided by Valencia - Instituto de Investigaciones Economicas in its series Papers with number
96-19.
Find related papers by JEL classification: D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation