Macroeconomic fluctuations in a New Keynesian disequilibrium model
Bas Aarle ()
Additional contact information
Bas Aarle: Leuven Center for Irish Studies
Journal of Economic Structures, 2017, vol. 6, issue 1, 1-20
Abstract This study extends the current New Keynesian modeling framework by changing one crucial aspect: it replaces the general equilibrium assumption by the arguably more realistic assumption of macroeconomic disequilibrium. As a result, more complex and less smooth macroeconomic adjustment dynamics result, as it is not necessary to assume that goods and labor markets continuously clear. The disequilibrium dynamics in the form of regime-dependent output-, employment-, price- and wage fluctuations complicate the decision making problems faced by the fiscal and monetary policy makers substantially. In particular, the possibility of (multiple) regime switches implies the need for deeper analysis and careful monitoring of the disequilibrium mechanisms and dynamics when designing and implementing monetary and fiscal policies.
Keywords: Disequilibrium analysis; New Keynesian model; Rationing; Macroeconomic policy (search for similar items in EconPapers)
JEL-codes: C22 E32 E66 F42 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1186/s40008-017-0070-2 Abstract (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jecstr:v:6:y:2017:i:1:d:10.1186_s40008-017-0070-2
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of Economic Structures is currently edited by Shigemi Kagawa and Kazuhiko Nishimura
More articles in Journal of Economic Structures from Springer, Pan-Pacific Association of Input-Output Studies (PAPAIOS) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().