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Credit and Cash-in-Advance in Disequilibrium Models

  • Sander van der Hoog

An agent-based computational model is studied with a sequential market structure. We consider a stationary exchange economy with trade taking place outside equilibrium. This implies quantity rationing and cash in advance constraints. The updating of prices and cash balances makes it necessary for agents to continually re-optimize their trading plans subject to new transaction constraints, which include income-, financial- and quantity constraints. The decision-making process has a moving-horizon structure and the quantity constraints are incorporated into the optimization problem. The dynamics of the out-of-equilibrium price- and quantity adjustment process are shown to depend crucially on the market mechanisms that are imposed

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Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2004 with number 294.

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Date of creation: 11 Aug 2004
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Handle: RePEc:sce:scecf4:294
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  17. Amendola, M & Gaffard, J L, 1992. "Intertemporal Complementarity and Money in an Economy out of Equilibrium," Journal of Evolutionary Economics, Springer, vol. 2(2), pages 131-45, August.
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