On the disequilibrium dynamics of sequential monetary economies
The purpose of this paper is to study the dynamic behavior of a sequential monetary exchange economy. Transactions take place sequentially against non-equilibrium prices, there is quantity rationing, and credit or cash are the only means of exchange. Agents have optimistic or pessimistic expectations about quantity constraints that represent their beliefs about future trading opportunities. In the credit model the agents incur debts along the transition path towards equilibrium, while in the cash-in-advance model convergence takes place without the occurrence of any debts or claims. The credit mechanism is shown to act as a 'soft' correction mechanism on credit fluctuations, while the cash-in-advance constraint acts as a 'hard' negative feedback effect driving the prices back towards a neighborhood of a monetary cash-in-advance equilibrium.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Weddepohl, Claus, 1995. "A cautious price adjustment mechanism: Chaotic behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 27(2), pages 293-300, July.
- Green, Jerry, 1980. "On the Theory of Effective Demand," Economic Journal, Royal Economic Society, vol. 90(358), pages 341-53, June.
- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
- Rob Axtell, 1999.
"The Complexity of Exchange,"
Computing in Economics and Finance 1999
211, Society for Computational Economics.
- Zappia, Carlo, 2001. "Equilibrium and Disequilibrium Dynamics in the 1930s," Journal of the History of Economic Thought, Cambridge University Press, vol. 23(01), pages 55-75, March.
- Clower, Robert & Leijonhufvud, Axel, 1975. "The Coordination of Economic Activities: A Keynesian Perspective," American Economic Review, American Economic Association, vol. 65(2), pages 182-88, May.
- Benassy Jean-pascal, 1974.
"Neokeynesian disequilibrium theory in a monetary economy,"
CEPREMAP Working Papers (Couverture Orange)
- Benassy, Jean-Pascal, 1975. "Neo-Keynesian Disequilibrium Theory in a Monetary Economy," Review of Economic Studies, Wiley Blackwell, vol. 42(4), pages 503-23, October.
- Robert L. Axtell, 2000. "Effect of Interaction Topology and Activation Regime in Several Multi-Agent Systems," Working Papers 00-07-039, Santa Fe Institute.
- Saari, Donald G, 1985. "Iterative Price Mechanisms," Econometrica, Econometric Society, vol. 53(5), pages 1117-31, September.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:68:y:2008:i:3-4:p:525-552. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.