A Possibility of Protracted Output Gaps in an Economy without Any Rigidity
AbstractThe paper examines a new possibility of output gaps in an economy without any rigidity. The driving force behind the new possibility is non-cooperative behavior of consumers. The paper shows that there is a possibility that when a fundamental shock hits an economy this non- cooperative nature makes consumers deviate form the optimal path of the representative consumer, and thus agents do not jump consumption and proceed on the deviated transition path.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0404007.
Length: 48 pages
Date of creation: 24 Apr 2004
Date of revision:
Note: Type of Document - pdf; pages: 48
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Output gaps; Disequilibrium; Intertemporal consumer choice; Business fluctuations;
Find related papers by JEL classification:
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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- Harashima, Taiji, 2011. "A Mechanism of Cyclical Volatility in the Vacancy-Unemployment Ratio: What Is the Source of Rigidity?," MPRA Paper 32476, University Library of Munich, Germany.
- Harashima, Taiji, 2009. "Depression as a Nash Equilibrium Consisting of Strategies of Choosing a Pareto Inefficient Transition Path," MPRA Paper 18953, University Library of Munich, Germany.
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