Abstract
In this chapter some stability properties of equilibria of the models from the preceding section will be investigated. The system
has several types of equilibria. As already pointed out in Section 4.5, for any element of the sets C and u the inequality\( \mathop w\limits^ \circ \ne 0 \) holds. So, equilibria of system (4.20) within these sets are impossible. There may be equilibria in the sets cl K and cl I. Equilibria in the sets K and I will be called Keynesian and Inflation equilibria, respectively. In an Inflation equilibrium the price of the good, the nominal wage rate wn and the nominal money stocks mn grow at the same rate. This inflation, however, does not affect the traded quantities of labour ℓ̂ and goods r̂, that are constant over time. In a Keynesian equilibrium the variables p, wn and mn decrease proportionally, so that there is a constant deflation and the quantities ℓ̂and r̂ are constant again.
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© 1983 Springer-Verlag Berlin Heidelberg
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van den Heuvel, P. (1983). Stability Properties of the Different Types of Equilibria. In: The Stability of a Macroeconomic System with Quantity Constraints. Lecture Notes in Economics and Mathematical Systems, vol 211. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-95420-7_5
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DOI: https://doi.org/10.1007/978-3-642-95420-7_5
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-11992-0
Online ISBN: 978-3-642-95420-7
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