
Accession Number : AD0709447
Title : DISEQUILIBRIUM DYNAMICS OF COMPETITIVE GROWTH PATHS.
Descriptive Note : Technical rept.,
Corporate Author : HARVARD UNIV CAMBRIDGE MASS
Personal Author(s) : Heller,Walter Perrin
Report Date : MAY 1970
Pagination or Media Count : 85
Abstract : The general problem is to find mechanisms by which an economy attains dynamic competitive equilibrium when there is no natural terminal date. If an auctioneer tentatively announces all future prices and households maximize utility over an infinite horizon and producers maximize profits, an excess demand is defined for consumption goods as well as capital goods for each date. In an infinite system of futures markets for consumption goods where there is no trading out of equilibrium and prices at date t rise (fall) if there is excess demand (supply) at that date, it turns out that prices converge to their equilibrium values, so long as the initial disequilibrium path is one in which the average interest rate 'at infinity' is an equilibrium interest rate. The class of admissible disequilibrium paths is considerably broadened if instead there are futures markets for capital goods, and the interest rate rises if there is excess demand for capital. (Author)
Descriptors : (*ECONOMICS, EQUILIBRIUM(PHYSIOLOGY)), (*COMMERCE, DYNAMICS), MATHEMATICAL MODELS, BEHAVIOR, STABILITY, GROWTH(PHYSIOLOGY), PERTURBATION THEORY, SEQUENCES(MATHEMATICS)
Subject Categories : Economics and Cost Analysis
Distribution Statement : APPROVED FOR PUBLIC RELEASE