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Credit and Cash-in-Advance in Disequilibrium Models

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  • Sander van der Hoog

Abstract

An agent-based computational model is studied with a sequential market structure. We consider a stationary exchange economy with trade taking place outside equilibrium. This implies quantity rationing and cash in advance constraints. The updating of prices and cash balances makes it necessary for agents to continually re-optimize their trading plans subject to new transaction constraints, which include income-, financial- and quantity constraints. The decision-making process has a moving-horizon structure and the quantity constraints are incorporated into the optimization problem. The dynamics of the out-of-equilibrium price- and quantity adjustment process are shown to depend crucially on the market mechanisms that are imposed

Suggested Citation

  • Sander van der Hoog, 2004. "Credit and Cash-in-Advance in Disequilibrium Models," Computing in Economics and Finance 2004 294, Society for Computational Economics.
    • Handle: RePEc:sce:scecf4:294
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    More about this item

    Keywords

    Disequilibrium; Sequential markets; Moving-horizon optimization; Financial constraints.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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