IDEAS home Printed from https://ideas.repec.org/p/ags/queddp/275195.html
   My bibliography  Save this paper

Simultaneous Price-Quantity Adjustments in the Presence of Spillovers Across Markets

Author

Listed:
  • McCurdy, Thomas H.
  • Yannelis, Demetrius C.

Abstract

Using a prototype non-market-clearing model, this paper analyses the implications of simultaneous output, price and wage adjustment at finite rates. Firms use a Marshallian-type output adjustment which utilizes available information about notional magnitudes. With this adjustment structure, the Walrasian equilibrium is shown to be globally stable. This result is compared with other formulations of the dynamics: such as, the usual structure which results in a continuum of non-Walrasian equilibria (along a boundary between regimes); and the formulation which excludes the forces of motion on the regime boundaries.

Suggested Citation

  • McCurdy, Thomas H. & Yannelis, Demetrius C., 1985. "Simultaneous Price-Quantity Adjustments in the Presence of Spillovers Across Markets," Queen's Institute for Economic Research Discussion Papers 275195, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275195
    DOI: 10.22004/ag.econ.275195
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/275195/files/QUEENS-IER-PAPER-569R.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.275195?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Blad, M.C. & Kirman, A.P., 1978. "The Long Run Evolution of a Rationed Equilibrium Model," The Warwick Economics Research Paper Series (TWERPS) 128, University of Warwick, Department of Economics.
    2. Ito, Takatoshi, 1979. "A Filippov solution of a system of differential equations with discontinuous right-hand sides," Economics Letters, Elsevier, vol. 4(4), pages 349-354.
    3. Blad, Michael C. & Christopher Zeeman, E., 1982. "Oscillations between repressed inflation and Keynesian equilibria due to inertia in decision making," Journal of Economic Theory, Elsevier, vol. 28(1), pages 165-182, October.
    4. repec:pri:indrel:dsp01dr26xx382 is not listed on IDEAS
    5. Bohm, Volker, 1978. "Disequilibrium dynamics in a simple macroeconomic model," Journal of Economic Theory, Elsevier, vol. 17(2), pages 179-199, April.
    6. Russell Cooper, 1984. "Expansionary Government Policy in an Economy with Commodity and Labor," Cowles Foundation Discussion Papers 727, Cowles Foundation for Research in Economics, Yale University.
    7. Svensson, Lars E. O., 1984. "Walrasian and Marshallian stability," Journal of Economic Theory, Elsevier, vol. 34(2), pages 371-379, December.
    8. Muellbauer, John & Portes, Richard, 1978. "Macroeconomic Models with Quantity Rationing," Economic Journal, Royal Economic Society, vol. 88(352), pages 788-821, December.
    9. Honkapohja, Seppo & Ito, Takatoshi, 1983. "Stability with regime switching," Journal of Economic Theory, Elsevier, vol. 29(1), pages 22-48, February.
    10. Beckmann, Martin J & Ryder, Harl E, Jr, 1969. "Simultaneous Price and Quantity Adjustment in a Single Market," Econometrica, Econometric Society, vol. 37(3), pages 470-484, July.
    11. Grandmont, Jean-Michel, 1977. " The Logic of the Fix-price Method," Scandinavian Journal of Economics, Wiley Blackwell, vol. 79(2), pages 169-186.
    12. Eckalbar, John C, 1980. "The Stability of Non-Walrasian Processes: Two Examples," Econometrica, Econometric Society, vol. 48(2), pages 371-386, March.
    13. Hildenbrand, Kurt & Hildenbrand, Werner, 1978. "On Keynesian equilibria with unemployment and quantity rationing," Journal of Economic Theory, Elsevier, vol. 18(2), pages 255-277, August.
    14. Veendorp, E C H, 1972. "Price-Quantity Adjustments in a Competitive Market," American Economic Review, American Economic Association, vol. 62(5), pages 1011-1015, December.
    15. Varian, Hal R, 1977. "Non-Walrasian Equilibria," Econometrica, Econometric Society, vol. 45(3), pages 573-590, April.
    16. Green, Jerry & Laffont, Jean-Jacques, 1981. "Disequilibrium dynamics with inventories and anticipatory price-setting," European Economic Review, Elsevier, vol. 16(1), pages 199-221.
    17. Honkapohja, Seppo & Ito, Takatoshi, 1982. "Disequilibrium dynamics with monetarist price expectations," Economics Letters, Elsevier, vol. 9(1), pages 69-75.
    18. BÖHM, Volker, 1978. "Disequililbrium dynamics in a simple macroeconomic model," LIDAM Reprints CORE 335, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    19. Honkapohja, Seppo & Ito, Takatoshi, 1985. " On Macroeconomic Equilibrium with Stochastic Rationing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(1), pages 66-88.
    20. Orley Ashenfelter & David Card, 1982. "Time Series Representations of Economic Variables and Alternative Models of the Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(5), pages 761-782.
    21. Grossman, Herschel I, 1971. "Money, Interest, and Prices in Market Disequilibrium," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 943-961, Sept.-Oct.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ogawa, Shogo, 2022. "Monetary growth with disequilibrium: A non-Walrasian baseline model," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 512-528.
    2. Ogawa, Shogo, 2022. "Survey of non-Walrasian disequilibrium economic theory," MPRA Paper 115011, University Library of Munich, Germany.
    3. Guy Laroque, 1991. "Inventories and the Fixprice Method," International Economic Association Series, in: Lionel W. McKenzie & Stefano Zamagni (ed.), Value and Capital: Fifty Years Later, chapter 8, pages 205-231, Palgrave Macmillan.
    4. van der Ploeg, F., 1987. "Rationing in open economy and dynamic macroeconomics : A survey," Other publications TiSEM fd411b51-f487-4dde-a0e9-6, Tilburg University, School of Economics and Management.
    5. Seppo Honkapohja & Takatoshi Ito, 1979. "A Stochastic Approach to Disequilibrium Macroeconomics," NBER Technical Working Papers 0001, National Bureau of Economic Research, Inc.
    6. Shogo Ogawa, 2022. "Neoclassical stability and Keynesian instability: A two‐sector disequilibrium approach," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 481-513, May.
    7. Ogawa, Shogo, 2019. "Effective Demand and Quantity Constrained Growth: A Simple Two-Sector Disequilibrium Approach," MPRA Paper 93336, University Library of Munich, Germany.
    8. van Marrewijk, Charles & Verbeek, Jos, 1993. "Disequilibrium Growth Theory in an International Perspective," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 311-331, April.
    9. J. Peter Neary & Joseph E. Stiglitz, 1979. "Towards A Reconstruction of Keynesian Economics: Expectations and Constrained Equilibria," NBER Working Papers 0376, National Bureau of Economic Research, Inc.
    10. Swanenberg, A.J.M., 1981. "Rationing and price dynamics in a simple market-game," Other publications TiSEM 43559370-0b7a-4bd0-87ed-6, Tilburg University, School of Economics and Management.
    11. Eckalbar, John C., 1985. "Inventories in a dynamic macro model with flexible prices," European Economic Review, Elsevier, vol. 27(2), pages 201-219, March.
    12. Shogo Ogawa, 2019. "Dynamic analysis of a disequilibrium macroeconomic model with dual labor markets," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 525-550, July.
    13. Lux, Thomas, 1992. "The sequential trading approach to disequilibrium dynamics," Open Access Publications from Kiel Institute for the World Economy 1510, Kiel Institute for the World Economy (IfW Kiel).
    14. Mandel, Antoine & Taghawi-Nejad, Davoud & Veetil, Vipin P., 2019. "The price effects of monetary shocks in a network economy," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 300-316.
    15. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2021. "European Economics and the Early Years of the International Seminar on Macroeconomics," Revue d'économie politique, Dalloz, vol. 131(4), pages 693-722.
    16. Harald Hagemann, 2020. "Productivity, Profitability, Wages and Unemployment: The Impact of Malinvaud's Theory of Rationing in Germany," GREDEG Working Papers 2020-54, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    17. Eckwert, Bernhard & Schittko, Ulrich, 1988. " Disequilibrium Dynamics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(2), pages 189-209.
    18. Benassy, Jean-Pascal, 1990. "Non-Walrasian equilibria, money, and macroeconomics," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 4, pages 103-169, Elsevier.
    19. Akio Matsumoto, 1993. "Dynamic complexity in a stochastic rationing model," Journal of Economics, Springer, vol. 57(3), pages 233-259, October.
    20. Casajus, André & Kramm, Michael & Wiese, Harald, 2020. "Asymptotic stability in the Lovász-Shapley replicator dynamic for cooperative games," Journal of Economic Theory, Elsevier, vol. 186(C).

    More about this item

    Keywords

    Financial Economics; Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:queddp:275195. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.