The Macroeconomics of Imperfect Competition and Nonclearing by Jean-Pascal Benassy

By Jean-Pascal Benassy

In this ebook, Jean-Pascal Benassy makes an attempt to combine right into a unmarried unified framework dynamic macroeconomic versions reflecting such different traces of suggestion as normal equilibrium thought, imperfect festival, Keynesian conception, and rational expectancies. He starts off with an easy microeconomic synthesis of imperfect pageant and nonclearing markets normally equilibrium below rational expectancies. He then applies this framework to numerous dynamic macroeconomic types, protecting such subject matters as power unemployment, endogenous development, and optimum fiscal-monetary guidelines. The macroeconomic method he makes use of is identical in spirit to that of the preferred actual company cycles conception, however the scope is way wider. the entire types are solved "by hand," making the underlying monetary mechanisms quite clear.

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Extra resources for The Macroeconomics of Imperfect Competition and Nonclearing Markets: A Dynamic General Equilibrium Approach

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N (7) such that n Fi h (˜z 1h , . . , z˜ nh ) = 0 for all z˜ 1h , . . , z˜ nh (8) i=1 We will generally assume that Fi h is continuous, nondecreasing in z˜ i h and nonincreasing in the other arguments. We already saw the example of a queue in chapter 1. 1 Properties of Rationing Schemes We now review again briefly, in this more general framework, three important properties that a rationing scheme may potentially satisfy: voluntary exchange, market efficiency and nonmanipulability. There is voluntary exchange in market h if no agent can be forced to purchase more than he demands, or to sell more than he supplies.

However, in times when the emphasis is on the microeconomic foundations of macroeconomics, one may legitimately inquire whether the concepts outlined in the two preceding chapters can be developed in a full general equilibrium framework such as the one students of Walrasian economics are accustomed to. We shall give a positive answer to this question by constructing a number of general equilibrium concepts with price rigidities and imperfect competition. These concepts are developed in the traditional multimarket and multiagent Walrasian framework which we will first briefly outline.

In other words, a household that does not succeed in consuming what it wants will be led to reduce its supply of labor. Now suppose again that government has priority in the goods market and that production is high enough to satisfy G (the reader can easily work out the case where it is not). Then C¯ is equal to the household’s purchases on the goods market, namely C¯ = C ∗ = Y ∗ − G (27) Since there is excess demand for labor, the transaction N ∗ is equal to the effective labor supply N˜ s . Combining this with equations (26), (27), and the definition of profits, we obtain the equilibrium amount of labor in this regime, denoted as Ni : (1 − α)W V (Ni ) = ¯ M + PG − PT (28) Because there is excess demand for goods, transactions in the goods market are equal to the supply of output.

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