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Non-Trivial Equilibrium in an Economy With Stochastic Rationing

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  • Seppo Honkapohja
  • Takatoshi Ito

Abstract

Stochastic rationing when the market does not clear draws attention because both Dreze (1975) and Benassy (1975) quantity-constrained equilibria have some undesirable features. Gale (1978)gave the existence proof of trade under uncertainty. His stochastic rationing depends on all the individual effective demands. It is too vague to characterize a rationing mechanism. Moreover, his assumption to ensure a non-trivial equilibrium is economically not clear. In this paper we extend Green (1978) to characterizing the rationing scheme as the individual effective demand times the rationing number which is a function of the aggregate quantity signals. We also construct an economy with money and overlapping generations. We show the existence of the non-trivial equilibrium and provide an example of a non-Wairasian equilibrium at the Walrasian equilibrium prices.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0322.

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Date of creation: Feb 1979
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Handle: RePEc:nbr:nberwo:0322

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  1. Fuchs, Gerard, 1977. "Formation of expectations : A model in temporary general equilibrium theory," Journal of Mathematical Economics, Elsevier, vol. 4(2), pages 167-187, August.
  2. Grandmont, Jean-Michel, 1972. "Continuity properties of a von Neumann-Morgenstern utility," Journal of Economic Theory, Elsevier, Elsevier, vol. 4(1), pages 45-57, February.
  3. Green, Jerry R & Majumdar, Mukul, 1975. "The Nature of Stochastic Equilibria," Econometrica, Econometric Society, Econometric Society, vol. 43(4), pages 647-60, July.
  4. Heller, Walter Perrin & Starr, Ross M, 1979. "Unemployment Equilibrium with Myopic Complete Information," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(2), pages 339-59, April.
  5. GRANDMONT, Jean-Michel & HILDENBRAND, Werner, . "Stochastic processes of temporary equilibria," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -206, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Fuchs, Gerard, 1976. "Asymptotic stability of stationary temporary equilibria and changes in expectations," Journal of Economic Theory, Elsevier, Elsevier, vol. 13(2), pages 201-216, October.
  7. Fuchs, Gerard & Laroque, Guy, 1976. "Dynamics of Temporary Equilibria and Expectations," Econometrica, Econometric Society, Econometric Society, vol. 44(6), pages 1157-78, November.
  8. Benassy, Jean-Pascal, 1975. "Neo-Keynesian Disequilibrium Theory in a Monetary Economy," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 42(4), pages 503-23, October.
  9. GRANDMONT, Jean-Michel & LAROQUE, Guy, . "Money in the pure consumption loan model," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -152, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Bohm, Volker, 1978. "Disequilibrium dynamics in a simple macroeconomic model," Journal of Economic Theory, Elsevier, Elsevier, vol. 17(2), pages 179-199, April.
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Cited by:
  1. Seppo Honkapohja & Takatoshi Ito, 1979. "A Stochastic Approach to Disequilibrium Macroeconomics," NBER Technical Working Papers 0001, National Bureau of Economic Research, Inc.
  2. Weinrich, Gerd, 1984. "Les effets du changement du taux de salaire dans un état de chômage keynésien avec rationnement stochastique," L'Actualité Economique, Société Canadienne de Science Economique, Société Canadienne de Science Economique, vol. 60(4), pages 452-470, décembre.
  3. Takatoshi Ito, 1979. "A Note on Stochastic Rationing Mechanisms," NBER Working Papers 0313, National Bureau of Economic Research, Inc.

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