Abstract
Temporary general equilibrium views the dynamic evolution of an economy as taking place sequentially in calendar time, with decisions being made and equilibrium being achieved at each date in the light of the traders’ expectations about the future. The article surveys the contributions of the field to the microeconomic foundations of macroeconomics, in particular to the analysis of monetary phenomena, non-clearing markets, imperfect competition and the foundations of Keynesian unemployment, as well as the study of economic dynamics and (in) stability of self-fulfilling expectations under various learning schemes, in relation in particular with ‘excess volatility’ of financial markets.
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Grandmont, JM. (2018). Temporary Equilibrium. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1897
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DOI: https://doi.org/10.1057/978-1-349-95189-5_1897
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