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Existence and multiplicity of temporary equilibria under nominal price rigidities

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  • Jacques Dreze

    (Université catholique de Louvain)

Abstract

This paper proves existence of a multiplicity of equilibria in a two-period TGE model with money and nominal rigidities. Households have incomplete preferences and firms reach decisions through the “control principle”. The multiple equilibria belong to an inflation–unemployment locus allowing for a Phillips curve or stagflation.

Suggested Citation

  • Jacques Dreze, 2016. "Existence and multiplicity of temporary equilibria under nominal price rigidities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 279-298, June.
    • Handle: RePEc:spr:joecth:v:62:y:2016:i:1:d:10.1007_s00199-015-0898-3
    DOI: 10.1007/s00199-015-0898-3
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    Keywords

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    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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