IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/0971.html
   My bibliography  Save this paper

Anticipations, Recessions and Policy: An Intertemporal Disequilibrium Model

Author

Listed:
  • Olivier J. Blanchard
  • Jeffrey Sachs

Abstract

This paper presents an intertemporal disequilibrium model with rational expectations, i.e. a model in which agents anticipate the future rationally, but in which prices and wages may not adjust fast enough to maintain continuous market clearing. Therefore, optimizing firms and households base their intertemporal plans on anticipations of both future quantity constraints and future prices. Such a model shows clearly that the effect of a policy depends not only on its current values but its anticipated path, After a presentation of the model and its basic dynamics, we therefore consider the effects of various paths of fiscal policy on the economy.

Suggested Citation

  • Olivier J. Blanchard & Jeffrey Sachs, 1982. "Anticipations, Recessions and Policy: An Intertemporal Disequilibrium Model," NBER Working Papers 0971, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0971
    Note: EFG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w0971.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Abel, Andrew B & Blanchard, Olivier J, 1983. "An Intertemporal Model of Saving and Investment," Econometrica, Econometric Society, vol. 51(3), pages 675-692, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. van de Klundert, T.C.M.J., 1988. "Wage rigidity, capital accumulation and unemployment in a small open economy," Other publications TiSEM 619a319e-33e9-49e1-917c-7, Tilburg University, School of Economics and Management.
    2. Rama, Martin, 1990. "Empirical investment equations in developing countries," Policy Research Working Paper Series 563, The World Bank.
    3. Rankin, Neil & Scalera, Domenico, 1995. "Death and the Keynesian multiplier," Ricerche Economiche, Elsevier, vol. 49(1), pages 75-87, March.
    4. Jean-Pierre Laffargue & Pierre Malgrange & Thierry Pujol, 1992. "Une maquette trimestrielle de l’économie française avec anticipations rationnelles et concurrence monopolistique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(1), pages 225-261.
    5. van de Klundert, Th. & Peters, P., 1986. "Tax incidence in a model with perfect foresight of agents and rationing in markets," Journal of Public Economics, Elsevier, vol. 30(1), pages 37-59, June.
    6. van de Klundert, T.C.M.J., 1986. "Economic resilience : a two-country analysis," Other publications TiSEM 4043a5d9-a677-4744-94e7-1, Tilburg University, School of Economics and Management.
    7. Feltenstein, Andrew & Morris, Stephen, 1988. "Fiscal stabilization and exchange rate instability," Policy Research Working Paper Series 74, The World Bank.
    8. Richard N. Cooper & Jeffrey Sachs, 1984. "Borrowing Abroad: The Debtor's Perspective," NBER Working Papers 1427, National Bureau of Economic Research, Inc.
    9. van de Klundert, T.C.M.J. & Peters, P., 1986. "Price inertia in a macroeconomic model of monopolistic competition," Other publications TiSEM 9b1b7d62-903d-4ebd-a4cf-a, Tilburg University, School of Economics and Management.
    10. van de Klundert, T.C.M.J. & Peters, P., 1986. "Price inertia in a macroeconomic model of monopolistic competition," Research Memorandum FEW 221, Tilburg University, School of Economics and Management.
    11. van Gemert, H.G. & de Groof, R.J. & Peer, H.W.G.M. & van Schaik, A.B.T.M., 1989. "Theo van de Klundert : A frontier economist," Other publications TiSEM 60b4aaf0-9730-4829-961a-9, Tilburg University, School of Economics and Management.
    12. Cuthbertson, K. & Gasparro, D., 1995. "Fixed investment decisions in UK manufacturing: The importance of Tobin's Q, output and debt," European Economic Review, Elsevier, vol. 39(5), pages 919-941, May.
    13. van de Klundert, T.C.M.J., 1988. "Wage rigidity, capital accumulation and unemployment in a small open economy," Research Memorandum FEW 320, Tilburg University, School of Economics and Management.
    14. 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.

    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. Kristinn Hermannsson & Patrizio Lecca, 2016. "Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact," Economic Papers, The Economic Society of Australia, vol. 35(1), pages 24-36, March.
    2. Mukoyama, Toshihiko, 2021. "MIT shocks imply market incompleteness," Economics Letters, Elsevier, vol. 198(C).
    3. Michel Guillard, 1992. "Déséquilibres macro-économiques et rationnement du crédit," Revue Économique, Programme National Persée, vol. 43(6), pages 1071-1105.
    4. Kuralbayeva, Karlygash, 2013. "Optimal fiscal policy and different degrees of access to international capital markets," Journal of Development Economics, Elsevier, vol. 103(C), pages 336-352.
    5. Philip L. Brock, 2009. "Collateral Constraints and Macroeconomic Adjustment in an Open Economy," Working Papers UWEC-2009-03, University of Washington, Department of Economics.
    6. M. Marzo, 2001. "Evaluating Monetary Policy Regimes: the Role of Nominal Rigidities," Working Papers 411, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Mankiw, N Gregory, 1987. "Government Purchases and Real Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 407-419, April.
    8. Chen-Min Hsu, 1995. "Debt Financing, Public Investment, and Economic Growth in Taiwan," NBER Chapters, in: Growth Theories in Light of the East Asian Experience, pages 129-151, National Bureau of Economic Research, Inc.
    9. Lindmark, Magnus & Andersson, Lars Fredrik, 2014. "Where Was the Wealth of the Nation? Measuring Swedish Capital for the 19th and 20th Centuries," CERE Working Papers 2014:1, CERE - the Center for Environmental and Resource Economics.
    10. Joseph Mawejje & Nicholas M. Odhiambo, 2022. "Macroeconomic determinants of fiscal policy in East Africa: a panel causality analysis," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 27(53), pages 105-123, February.
    11. Hans‐Werner Sinn, 2000. "EU Enlargement, Migration, and Lessons from German Unification," German Economic Review, Verein für Socialpolitik, vol. 1(3), pages 299-314, August.
    12. Davig, Troy & Leeper, Eric M. & Walker, Todd B., 2010. ""Unfunded liabilities" and uncertain fiscal financing," Journal of Monetary Economics, Elsevier, vol. 57(5), pages 600-619, July.
    13. Sen, Partha & Turnovsky, Stephen J., 1989. "Deterioration of the terms of trade and capital accumulation: A re-examination of the Laursen-Metzler effect," Journal of International Economics, Elsevier, vol. 26(3-4), pages 227-250, May.
    14. Ho, Kong Weng & Hoon, Hian Teck, 1995. "Macroeconomic shocks and the endogenous response of the stock market and real interest rates in a neoclassical general equilibrium model," Economic Modelling, Elsevier, vol. 12(1), pages 28-34, January.
    15. Erica X. N. Li & Dmitry Livdan & Lu Zhang, 2009. "Anomalies," The Review of Financial Studies, Society for Financial Studies, vol. 22(11), pages 4301-4334, November.
    16. Deng, Zhengxing & Hao, Yu, 2024. "Energy price uncertainty, environmental policy, and firm investment: A dynamic modeling approach," Energy Economics, Elsevier, vol. 130(C).
    17. Van Der Ploeg, F., 1989. "Tow Essays On Political Economy," Papers 8909, Tilburg - Center for Economic Research.
    18. Erzo Luttmer, 2017. "Slow Convergence in Economies with Organization Capital," 2017 Meeting Papers 1117, Society for Economic Dynamics.
    19. Abel, Andrew B & Eberly, Janice C, 1994. "A Unified Model of Investment under Uncertainty," American Economic Review, American Economic Association, vol. 84(5), pages 1369-1384, December.
    20. Agenor, Pierre-Richard & Pizzati, Lodovico, 2005. "Disinflation and the supply side," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 596-620, December.

    More about this item

    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:nbr:nberwo:0971. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.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.