Modeling of Economic Systems Under Conditions of Short-Term Market Disequilibrium

Моделирование экономических систем в условиях краткосрочного рыночного неравновесия

Mark Levin

Working Papers from Russian Presidential Academy of National Economy and Public Administration

Abstract: Standard economic theory answers general questions about efficient distribution, balance and well-being. But to solve real problems, refinements and clarifications are needed. For example, the supply and demand model predicts where equilibrium will be established, but does not explain the market's behavior in the period prior to its establishment, that is, while the price does not balance the amount of demand and supply. In reality, in many situations, prices do not have absolute flexibility, and therefore, in short-term, they can not instantly change in such a way to balance supply and demand. This leads to a deficit of some goods and an excess of other goods. Such disequilibrium causes inefficiency of current market conditions, which, in turn, requires additional adjustments.

Pages: 38 pages
Date: 2017-04
New Economics Papers: this item is included in nep-dcm
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