Two polar cases of dynamic stability: voluntary exchange and income redistribution

Haim Abraham ()

Economic Theory, 2006, vol. 28, issue 1, 213-219

Abstract: It is known that when voluntary exchange is permitted at disequilibrium, dynamic stability may fail because of lack of liquidity. In this paper it is shown that when the economy runs out of liquidity dynamic stability can still be restored by means of a planning procedure of redistributing personal incomes. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Planning procedure; Stability; Voluntary exchange. (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s00199-005-0608-7

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