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A dynamic model of a monetary production economy under the disequilibrium economics approach

Author

Listed:
  • Marco Raberto
  • Andrea Teglio

Abstract

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

Suggested Citation

  • Marco Raberto & Andrea Teglio, 2005. "A dynamic model of a monetary production economy under the disequilibrium economics approach," Computing in Economics and Finance 2005 320, Society for Computational Economics.
    • Handle: RePEc:sce:scecf5:320
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    References listed on IDEAS

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    1. 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.
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    3. Drazen, Allan, 1980. "Recent Developments in Macroeconomic Disequilibrium Theory," Econometrica, Econometric Society, vol. 48(2), pages 283-306, March.
    4. Muellbauer, John & Portes, Richard, 1978. "Macroeconomic Models with Quantity Rationing," Economic Journal, Royal Economic Society, vol. 88(352), pages 788-821, December.
    5. Benassy, Jean-Pascal, 1993. "Nonclearing Markets: Microeconomic Concepts and Macroeconomic Applications," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 732-761, June.
    6. Varian, Hal R, 1977. "Non-Walrasian Equilibria," Econometrica, Econometric Society, vol. 45(3), pages 573-590, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    disequilibrium economics; economic dynamics; monetary policy;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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