A dynamic model of a monetary production economy under the disequilibrium economics approach
This paper presents a model of a monetary production economy with non-Walrasian good, labor and money markets. In the non-Walrasian approach, transactions occur at non clearing prices and agents's demand and supply are affected by quantity constraints in the opposite side of the market. The model is characterized by a representative firm, which maximize profits subject to a production technology, a representative consumer, which maximize utility subject to a budget constraint, and by a central bank which provide liquidity. The consumer provides the labor force and owns all the equities of the firm. The main result of the model is the existence of non-Warlasian equilibria which are suboptimal with respect to Warlasian ones. Furthermore, non-Warlasian equilibria are characterized by money non-neutrality and proper monetary policies are found to be able to bring the system near to the Walrasian point
|Date of creation:||11 Nov 2005|
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- Barro, Robert J & Grossman, Herschel I, 1971. "A General Disequilibrium Model of Income and Employment," American Economic Review, American Economic Association, vol. 61(1), pages 82-93, March.
- Muellbauer, John & Portes, Richard, 1978. "Macroeconomic Models with Quantity Rationing," Economic Journal, Royal Economic Society, vol. 88(352), pages 788-821, December.
- Drazen, Allan, 1980. "Recent Developments in Macroeconomic Disequilibrium Theory," Econometrica, Econometric Society, vol. 48(2), pages 283-306, March.
- Benassy, Jean-Pascal, 1993. "Nonclearing Markets: Microeconomic Concepts and Macroeconomic Applications," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 732-61, June.
- Varian, Hal R, 1977. "Non-Walrasian Equilibria," Econometrica, Econometric Society, vol. 45(3), pages 573-90, April.
- Svensson, Lars E O, 1981. " Effective Demand in a Sequence of Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 83(1), pages 1-21.
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