The American economy has undergone a dramatic structural change in the first decade of the 21st Century. The real-economy causes of this transformation, and their expression via the real estate market and its financial derivatives’ market, and their final manifestation in world financial markets, is explained using traditional economic theory. A three-sector Walrasian general equilibrium model, and a non-Walrasian temporary equilibrium model with fixed prices and quantity constraints, are both utilized to explain the real-economy causes of the observed stylized facts. Some remedies that will likely work, and ones that will not, are also identified. (95 words)
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
11369.
Find related papers by JEL classification: D5 - Microeconomics - - General Equilibrium and Disequilibrium D3 - Microeconomics - - Distribution F2 - International Economics - - International Factor Movements and International Business E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit F1 - International Economics - - Trade E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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