Market Mechanism: Stabilizing or Destabilizing?

Ichiro Takahashi
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Ichiro Takahashi: Chuo University

Chapter Chapter 1 in An Artificial Wicksell—Keynes Macroeconomy, 2021, pp 1-20 from Springer

Abstract: Abstract This chapter introduces the readers to the issue of macroeconomic stability. We begin by discussing two opposing views on this: market-clearing view (Sect. 1.1) and Keynesian view (Sect. 1.2). Section 1.3 presents the main theme of the book. To aid the reader’s understanding, Sect. 1.4 preemptively outlines the stabilizing mechanism that is the core of this book. Section 1.5 introduces Wicksellian cumulative process to clarify the disequilibrium nature. While discussing the cumulative nature of fluctuations, Sect. 1.6 explains why agent-based approach would be appropriate for describing a cumulative process like economic recovery. Some essential feedback loops are then discussed (Sect. 1.7) to provide an overview of the aggregate-demand dynamics (Sect. 1.8). The role of wage and price rigidity for stability is summarized (Sect. 1.9) and related work is briefly introduced (Sect. 1.10).

Date: 2021
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DOI: 10.1007/978-981-16-6839-5_1

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