Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices

Alessandro Citanna, Hervé Crès, Jacques Dreze, P. Jean-Jacques Herings and Antonio Villanacci ()

No 732, HEC Research Papers Series from HEC Paris

Abstract: In this paper the existence of unemployment is partly explained as being the result of coordination failures. It is shown that as a result of self-fulfilling pessimistic expectations, even at Walrasian prices, a continuum of equilibria results, among which an equilibrium with approximately no trade and a Walrasian equilibrium. These coordination failures also arise at other price systems, but then unemployment is the result of both a wrong price system and coordination failures. Some properties of the set of equilibria are analyzed. Generically, there exists a continuum of non-indifferent equilibrium allocations. Under a condition implied by gross substitutability, there exists a continuum of equilibrium allocations in the neighborhood of a competitive allocation, when prices are Walrasian. For a specialized economy, a dynamic illustration is offered.

Keywords: general equilibrium; underemployment; coordination failures; indeterminacy (search for similar items in EconPapers)
JEL-codes: C62 D51 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2001-05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.hec.fr/var/fre/storage/original/applica ... 0cc394aa5b4a7d53.pdf (application/pdf)

Related works:
Journal Article: Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices (2001)
Working Paper: Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices (2001)
Working Paper: Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices (2001)
Working Paper: Continua of Underemployment Equilibria Reflecting Coordination Failures, Also at Walrasian Prices (2001)
Working Paper: Continua of underemployment equilibria reflecting coordination failures, also at Walrasian prices (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0732

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().