Monetary Growth with Disequilibrium: a Non-Walrasian baseline model

Ogawa, Shogo (2020): Monetary Growth with Disequilibrium: a Non-Walrasian baseline model.

Abstract

In this study, we present a baseline monetary growth model for disequilibrium macroeconomics. Our model is similar to the existing Keynes-Wicksell models, but we highlight a characteristic of disequilibrium (non-Walrasian) macroeconomics, that is, the regime dividing in the static model. In addition, since we synthesize demand-side factors (Keynesian) and supply-side factors (neo-classical), we find a new effect on dynamical feedback loops, that is, the dual-decision effect. This new effect stabilizes (resp. destabilizes) an unstable (resp. a stable) feedback loop when the regime switches from the demand-side to the supply-side. Moreover, this dual-decision effect partly works on the real wage adjustment process and it enhances the instability if the economy is in Keynesian regime. We implement numerical experiments to confirm these results, and find that Walrasian equilibrium itself is not always stable.

• Item Type: MPRA Paper
• Language: English
• Keywords: Disequilibrium macroeconomics; Non-Walrasian analysis; Keynes-Wicksell model; Economic growth
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models

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