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A dynamic model of a monetary production economy under the disequilibrium economics approach

Marco Raberto () and Andrea Teglio
Authors registered in the RePEc Author Service: Silvano Cincotti ()

No 320, Computing in Economics and Finance 2005 from Society for Computational Economics

Abstract: This paper presents a model of a monetary production economy with non-Walrasian good, labor and money markets. In the non-Walrasian approach, transactions occur at non clearing prices and agents's demand and supply are affected by quantity constraints in the opposite side of the market. The model is characterized by a representative firm, which maximize profits subject to a production technology, a representative consumer, which maximize utility subject to a budget constraint, and by a central bank which provide liquidity. The consumer provides the labor force and owns all the equities of the firm. The main result of the model is the existence of non-Warlasian equilibria which are suboptimal with respect to Warlasian ones. Furthermore, non-Warlasian equilibria are characterized by money non-neutrality and proper monetary policies are found to be able to bring the system near to the Walrasian point

Keywords: disequilibrium economics; economic dynamics, monetary policy (search for similar items in EconPapers)
JEL-codes: D92 E12 E37 E5 (search for similar items in EconPapers)
Date: 2005-11-11
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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