Stock-Flow Adjustment and the Speed of Convergence of the Economy towards its Long-run Equilibrium

Angel Calderón-Madrid
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Angel Calderón-Madrid: El Colegio de Mexico

Chapter 3 in The Role of Private Financial Wealth in a Portfolio Model, 1995, pp 67-116 from Palgrave Macmillan

Abstract: Abstract Two components, whose mutual consistency was emphasized by James Tobin (1982) in his Nobel Lecture, are now indisputably embedded in macroeconomic models. First, the specification of the process determining the equilibrium levels of the endogenous variables of the model at a point in time: among these variables is the flow level of GDP, when it is demand-determined. Second, the specification of the dynamic process determining how changes in levels of stocks lead the economy from a predisturbance situation to a new long-run equilibrium.

Keywords: Current Account; Aggregate Demand; Financial Asset; Government Bond; Foreign Asset (search for similar items in EconPapers)
Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-37554-3_3

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DOI: 10.1057/9780230375543_3

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