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On the Macroeconomics of Uncertainty and Incomplete Markets

Jacques Dreze

No 2001011, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Presidential address for the Twelfth World Congress of the International Economic Association, summarising semi-formally the author's recent work and concerns. Uncertainty and incomplete markets breed demand volatility as well as price and wage rigidities. The conjunction of these leads to multiple, volatile supply-constrained equilibria, typically reflecting coordination failures and apt to display persistence - as documented by three supporting theorems. Specific implications are linked to the conclusions that we should take coordination failures seriously, try to obviate demand volatility and try to by-pass price and wage rigidities.

Keywords: Incomplete markets; wage and prices rigidities; supply-constrained equilibria; coordination failures (search for similar items in EconPapers)
JEL-codes: E10 E12 E32 (search for similar items in EconPapers)
Date: 2001-03-01
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http://sites.uclouvain.be/econ/DP/REL/2001011.pdf (application/pdf)

Related works:
Working Paper: On the macroeconomics of uncertainty and incomplete markets (2001)
Working Paper: On the macroeconomics of uncertainty and incomplete markets (1999) Downloads
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