Template-Type: ReDIF-Paper 1.0
Author-Name: Luca Colombo
Author-X-Name-First: Luca
Author-X-Name-Last: Colombo
Author-Email:lucava.colombo@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica

Author-Name: Gerd Weinrich
Author-X-Name-First: Gerd
Author-X-Name-Last: Weinrich
Author-Email: gerd.weinrich@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica

Title: Persistent disequilibrium dynamics and economic policy

Abstract: We develop a theoretical model involving temporary equilibria with quantity
rationing in each period and price adjustment between periods. The resulting
dynamic system may present a variety of dynamic behaviors, ranging from the
convergence to stationary or quasi-stationary states, to complex or even chaotic
dynamics. In particular, our framework has the property of being able to endogenously
allow for the characterization of persistent disequilibrium phenomena
— such us unemployment or deflation. It provides therefore for an ideal setup to
investigate the effects and persistency of recessionary phases, and to study the
effectiveness of different economic policies aimed at resolving them.

Length: nn pages 25
Creation-Date: 2009-03

File-URL: http://www.unicatt.it/Istituti/EconomiaFinanza/Quaderni/ief0086.pdf
File-Format: Application/pdf
File-Function: First version, 2009
Number: ief0086
Classification-JEL: D45, D50, E32, E37
Keywords: non-tâtonnement, complex dynamics, Phillips curve, expectations,
inventories, non-neutrality of money, deflation

Handle: RePEc:ctc:serie3:ief0086