Some New Concepts for the Microeconomic Foundations of Macroeconomics
It is by now widely accepted that the general competitive equilibrium does not provide the appropriate foundation for the macroeconomic theory of employment or for the study of decentralised transactions that react to some public macro-decisions. But we have no alternative accepted microeconomic model that would provide such a foundation. Important progress has been achieved recently in building up a concept of temporary equilibrium that greatly clarifies the macroeconomics of growth and some problems concerning short-term fluctuations. For unemployment, rationing and similar phenomena this concept is, however, unsuitable since it assumes the formation of prices that clear the markets at each time.
KeywordsCompetitive Equilibrium General Equilibrium Model Equilibrium Concept Feasible State Walrasian Equilibrium
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