Static and Dynamic Aspects of General Disequilibrium Theory

Herings, P. Jean-Jacques

doi:10.1007/978-1-4615-6251-1

Cited by 37 publications

(31 citation statements)

References 101 publications

(237 reference statements)

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“…We model the absence of constraints on a particular market ℓs t by setting z ℓst = −∞ andz ℓst = +∞, for instance at date-events in N a ℓ , where rationing does not take place at equilibrium. The way rationing is modeled is taken from the approach used by Drèze (1975) to study general equilibrium models with price rigidities, see Herings (1996b) for a general treatment. In the macroeconomic literature, such an approach is taken for instance in Svensson (1986).…”

Section: The Modelmentioning

confidence: 99%

General Equilibrium and the New Neoclassical Synthesis

Herings

2012

SSRN Journal

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We present a general equilibrium model of the new neoclassical synthesis that has the same level of generality as the Arrow-Debreu model. This involves a stochastic multiperiod economy with a monetary sector and sticky commodity prices. We formulate the notion of a sticky price equilibrium where all agents form rational expectations on prices for commodities and assets, interest rates, and rationing. We present a general result showing that monetary policy imposes no restrictions whatsoever on nominal equilibrium price levels and that the set of sticky price equilibria has a dimension equal to the number of terminal date-events. Stickiness of prices implies that this indeterminacy is real.

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Section: The Modelmentioning

confidence: 99%

General Equilibrium and the New Neoclassical Synthesis

Herings

2012

SSRN Journal

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“…In the literature of general equilibrium with price rigidities, many rationing schemes have been proposed (Drèze, 1975;Herings, 1996). These schemes typically have upper bounds on demand and supply, whereas in my model agents do not change the support of the distribution but only tilt the probabilities of demanding particular consumption bundles.…”

Section: Interim Equilibriummentioning

confidence: 99%

Bayesian general equilibrium

Toda

2014

Econ Theory

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In this paper I build a general equilibrium model of non-optimizing agents that respond to aggregate variables (prices and average demand profile of agent types) by putting a 'prior' on their demand. An interim equilibrium is defined by the posterior demand distribution of agent types conditional on market clearing. A Bayesian general equilibrium (BGE) is an interim equilibrium such that aggregate variables are correctly anticipated. Under weak conditions I prove the existence and the informational efficiency of BGE. I discuss the conditions under which the set of Bayesian and Walrasian equilibria coincide and show that the Walrasian equilibrium arises from a large class of non-optimizing behavior.

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“…According to Herings (1996) it follows that B i is a continuous correspondence at any q ∈ Q. With Assumption U it then follows that d i is a continuous function and so is the reduced excess demand function z: Q → IR n defined by…”

Section: The Equilibrating Mechanismmentioning

confidence: 99%

“…Notice that due to Walras' law z(q) = 0 n is generically a system of n − 1 independent equations in n unkowns, so that C is typically a 1-dimensional set, e.g. see Herings (1996). Hence, there exists a connected set of market clearing supply constrained disequilibria connecting the trivial non-trade disequilibrium to a Walrasian equilibrium.…”

Section: Proofmentioning

confidence: 99%

Dynamic Adjustment of Supply Constrained Disequilibria to Walrasian Equilibrium

Laan

Talman

2002

Equilibrium, Markets and Dynamics

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It is well-known that the classical Walrasian tatonnement process of adjusting prices does not need to converge. In several papers Weddepohl has shown cyclic or even chaotic behavior in discrete time tatonnement processes. Starting from a trivial non-trade disequilibrium with complete rationing on the supplies at a given vector of initial prices, a quantity and price adjustment process is proposed, converging always to a Walrasian equilibrium. At any price and rationing system generated by the process all markets clear, only supply rationing occurs, in the short run only rationing schemes are adjusted and in the long run both prices and rationings are adjusted. Furthermore, prices can only take values equal or above their initial values, while supply rationing only may occur when the corresponding price is on its initial value.

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Static and Dynamic Aspects of General Disequilibrium Theory

Cited by 37 publications

References 101 publications

General Equilibrium and the New Neoclassical Synthesis

General Equilibrium and the New Neoclassical Synthesis

Bayesian general equilibrium

Dynamic Adjustment of Supply Constrained Disequilibria to Walrasian Equilibrium

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