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On the disequilibrium dynamics of sequential monetary economies


Hoog, Sander van der


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Abstract The purpose of this paper is to study the dynamic behavior of a sequential monetary exchange economy. Transactions take place sequentially against non-equilibrium prices, there is quantity rationing, and credit or cash are the only means of exchange. Agents have optimistic or pes- simistic expectations about quantity constraints that represent their beliefs about future trading opportunities. In the credit model the agents incur debts along the transition path towards equilibrium, while in the cash-in-advance model convergence takes place without the occurrence of any debts or claims. The credit mechanism is shown to act as a 'soft' correction mechanism on credit fluctuations, while the cash-in-advance constraint acts as a 'hard' negative feedback effect driving the prices back towards a neighborhood of a monetary cash-in-advance equilibrium.
Klassifikation Volkswirtschaftslehre
Freie Schlagwörter Circular exchange; Trading posts; Effective demand; Quantity expectations; Moving-horizon optimization; C61; D51; D60; E31
Sprache Dokument Englisch
Publikationsjahr 2008
Seitenangabe S. 525-552
Zeitschriftentitel Journal of Economic Behavior & Organization, 68 (2008) 3-4
DOI http://dx.doi.org/10.1016/j.jebo.2008.06.008
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)