The Ad-As Model and its Solutions: Some New Results in A Disequilibrium Perspective

Alessandra Chirco (alessandra.chirco@unisalento.it) and Caterina Colombo (caterina.colombo@unife.it)

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: This paper extends the disequilibrium approach to aggregate demand and aggregate supply to situation in which the level of the fixed nominal wage is compatible with shortage of labour. We show that discontinuities arise in the AD-AS curves and that only a 'one sided,, not bilaterally stable equilibrium exists, which corresponds to the underconsumption regime. In order to show peculiarities, this extends AD-AS framework is then applied to a standard policy problem.

Date: 1996-01
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Journal Article: The AD-AS Model and Its Solutions: Some New Results in a Disequilibrium Perspective (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:241

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