Abstract

We present a dynamic macroeconomic model in which trades take place in each period even when prices are not at their Walrasian level. Prices and wages are adjusted between periods according to the intensity of rationing, a reliable measure of which is obtained through stochastic rationing. Dynamic adjustment equations are derived and implemented in a simulation program. The simulations show that structural parameters like the adjustment speed of prices and government policy parameters are decisive for the type of dynamics that emerges. In particular nominal wage stickiness stabilizes the economy whereas high wage flexibility favors cyclical and irregular behavior.
Original languageEnglish
Title of host publicationEconomic Complexity. Non-linear Dynamics, Multi-agents Economies, and Learning
Pages301-331
Number of pages31
Publication statusPublished - 2004

Publication series

NameInternational Symposia in Economic Theory and Econometrics

Keywords

  • (de)stabilizing policies
  • Non-tatonnement
  • complex dynamics
  • price adjustment
  • regime switching

Fingerprint

Dive into the research topics of 'A Dynamic Non-Tatonnement Macroeconomic Model with Stochastic Rationing'. Together they form a unique fingerprint.

Cite this