By Jean-Pascal Benassy
In this e-book, Jean-Pascal Benassy makes an attempt to combine right into a unmarried unified framework dynamic macroeconomic versions reflecting such assorted strains of suggestion as normal equilibrium thought, imperfect pageant, Keynesian thought, and rational expectancies. He starts off with an easy microeconomic synthesis of imperfect festival and nonclearing markets quite often equilibrium less than rational expectancies. He then applies this framework to plenty of dynamic macroeconomic types, overlaying such issues as power unemployment, endogenous development, and optimum fiscal-monetary guidelines. The macroeconomic technique he makes use of is the same in spirit to that of the preferred actual enterprise cycles idea, however the scope is far wider. all the versions are solved "by hand," making the underlying fiscal mechanisms rather clear.
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Additional info for The Macroeconomics of Imperfect Competition and Nonclearing Markets: A Dynamic General Equilibrium Approach
Sample text
An agent i in market h may make a purchase di h ≥ 0, or a sale si h ≥ 0. We define his net purchase of good h as z i h = di h − si h , and the -dimensional vector of these net purchases as z i . Agent i’s final holdings of nonmonetary goods and money, xi and m i , are, respectively, x i = ωi + z i (1) m i = m¯ i − pz i (2) Note that equation (2), which describes the evolution of money holdings, is simply the conventional budget constraint for a monetary economy. 2 Equilibrium Having described the basic institutional structure of the economy, we now describe its Walrasian equilibrium, in order to contrast it with the non-Walrasian equilibrium concepts that will follow.
The problem is that all rationed demanders will do exactly the same thing, and as a result the perceived rationing schemes will move in time in such a way that the same demand yields an ever lower transaction. It is easy to see that because of this overbidding phenomenon, demands may grow without bound, so that no equilibrium with finite demands and supplies exists, as we will now observe in a simple example. An Example Let us consider the case of a supplier facing two demanders, indexed by 1 and 2.
We thus consider a simple economy and study successively macroeconomic equilibria under the following assumptions on price and wage formation: (1) Walrasian equilibrium, (2) rigid prices and wages, and (3) imperfect competition in the goods and labor markets. We will learn that employment and output determination, as well as the effects of economic policies, can be very different, depending not only on the pricing scheme but, for a given pricing scheme, even on the endogenously determined regime of the economy.
