Cobweb theorems with production lags and price forecasting

Daniel Dufrfesne and Felisa Vázquez-Abad

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2013, vol. 7, No 2013-23, 49 pages

Abstract: The classical cobweb theorem is extended to include production lags and price forecasts. Price forecasting based on a longer period has a stabilizing effect on prices. Longer production lags do not necessarily lead to unstable prices; very long lags lead to cycles of constant amplitude. The classical cobweb requires elasticity of demand to be greater than that of supply; this is not necessarily the case in a more general setting. Random shocks are also considered.

JEL-codes: C02 C62 E32 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:201323

DOI: 10.5018/economics-ejournal.ja.2013-23

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