A Possibility of Protracted Output Gaps in an Economy without Any Rigidity

Taiji Harashima

Microeconomics from University Library of Munich, Germany

Abstract: The paper examines a new possibility of output gaps in an economy without any rigidity. The driving force behind the new possibility is non-cooperative behavior of consumers. The paper shows that there is a possibility that when a fundamental shock hits an economy this non- cooperative nature makes consumers deviate form the optimal path of the representative consumer, and thus agents do not jump consumption and proceed on the deviated transition path.

Keywords: Output gaps; Disequilibrium; Intertemporal consumer choice; Business fluctuations (search for similar items in EconPapers)
JEL-codes: D50 D91 E32 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2004-04-24
New Economics Papers: this item is included in nep-mac
Note: Type of Document - pdf; pages: 48
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0404007

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