Persistent disequilibrium dynamics and economic policy

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

No ief0086, DISCE - Quaderni dell'Istituto di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: We develop a theoretical model involving temporary equilibria with quantity rationing in each period and price adjustment between periods. The resulting dynamic system may present a variety of dynamic behaviors, ranging from the convergence to stationary or quasi-stationary states, to complex or even chaotic dynamics. In particular, our framework has the property of being able to endogenously allow for the characterization of persistent disequilibrium phenomena — such us unemployment or deflation. It provides therefore for an ideal setup to investigate the effects and persistency of recessionary phases, and to study the effectiveness of different economic policies aimed at resolving them.

Keywords: non-tâtonnement; complex dynamics; Phillips curve; expectations; inventories; non-neutrality of money; deflation (search for similar items in EconPapers)
JEL-codes: D45 D50 E32 E37 (search for similar items in EconPapers)
Pages: nn pages 25
Date: 2009-03
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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