Deflationary Recessions in a General Equilibrium Framework

Luca Colombo and Gerd Weinrich ()
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Gerd Weinrich: Università Cattolica

A chapter in The Complex Networks of Economic Interactions, 2006, pp 125-138 from Springer

Abstract: Summary This paper investigates the role of fiscal and monetary shocks in the occurrence of deflationary recessions. Our model is based on a temporary equilibrium approach with stochastic rationing, where inventory dynamics is explicitly taken into account, amplifying spillover effects between markets. This setting allows us to study the driving forces behind disequilibrium phenomena, and to investigate the efficacy of alternative policies in overcoming them. In particular, we provide for an application of our approach to the study of the Japanese deflationary recession.

Keywords: Inventories; non-tâtonnement; price adjustment; deflationary recessions (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-28727-8_8

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DOI: 10.1007/3-540-28727-2_8

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