Abstract
In this chapter we reconsider the microfounded approaches to macro-statics and -dynamics that started from the so-called fix-price models (with quantity adjustments in the place of price adjustments) for their determination of temporary equilibrium positions. We shall reconsider these approaches here purely on the macrolevel and from the perspective of descriptive macrodynamics in order to investigate the contributions of these approaches to macrodynamics to a further improvement of our general KMG model of monetary growth.
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References
This designation was introduced by Benassy (1977).
The fourth possible combination of such market constellations is not available in the present type of model.
See also Flaschel (1999a) with respect to the following reformulation of Non-Walrasian rationing regimes.
This assertion is similar to one in Picard (1983, p.279), but does not allow for alternative regimes in the present framework.
See the proof for the expressions that define a 1 a 2.
Note here that the measure U n is closely linked to the measure Ue c and thus does not add something that is qualitatively very different from the effects of the rate of capacity utilization on the evolution of price inflation.
Wage earners are here excluded from this proportional reduction of the demand plans of economic agents in order to avoid unnecessary complications for a first presentation of the case of rationing (since one would have to consider their forced savings in such a situation and thus add money holdings of workers for example).
In general, it can not be excluded, that at least in some cases the jump in dividend payments just described is large enough to push aggregate demand again below the level of production, so that the economy immediately returns to the former regime after inventories have become exhausted.
This describes a situation, where all shops and factories have nothing left after each trading period
This designation should not be taken too literally and not be confused with our regime 1. While in regime 1 demand is always served, its rationing is the main characteristic of regime 2 and thus also of the so-called “Keynesian” subregime just mentioned.
Compare in this respect also the treatment of these problems in Laxton et al. (1998) .
The same holds when inventories return to positive levels by way of an aggregate demand that does not absorb total production.
See pp.542/3 in Solow and Stiglitz (1968).
See Solow and Stiglitz (1968, p.544) for a discussion of this alternative and note that the above equations of the Solow-Stiglitz model would then allow output Y to feedback into the rest of the model which it does not in the present formulation of it. Note also that this problematic feature of the original version of the Solow-Stiglitz model will not exist in our Keynesian reformulation of the model that follows below.
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© 2000 Springer-Verlag Berlin Heidelberg
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Chiarella, C., Flaschel, P., Groh, G., Semmler, W. (2000). Fix-Price Approaches: Regime Switching Overstated. In: Disequilibrium, Growth and Labor Market Dynamics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04070-6_5
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DOI: https://doi.org/10.1007/978-3-662-04070-6_5
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-08443-0
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