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Walras-Keynes equilibria coordination and macroeconomics

Listed author(s):
  • DREZE, Jacques H.

    ()

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

In decentralised market economies, supply-constrained equilibria may persist as coordination failures, sustained but not caused by price rigidities. This feature may be arbitrarily severe, even at prices com- patible with competitive equilibrium. The supply-constraints may originate in rational expectations. Some implications for macroeco- nomics are drawn. The possibility of coordination failures explains why organised labour may resist wage flexibility. These features are il- lustrated in elementary macroeconomic prototypes, like RBC or Barro- Grossman-Malinvaud prototypes.

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File URL: http://alfresco.uclouvain.be/alfresco/download/attach/workspace/SpacesStore/ac9fa25a-c14f-49fe-8711-8a25dafd3e5b/coredp_1997_51.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997051.

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Date of creation: 24 Jul 1997
Handle: RePEc:cor:louvco:1997051
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Web page: http://www.uclouvain.be/core
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