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A dynamic general disequilibrium model of a sequential monetary production economy

Author

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  • Raberto, Marco
  • Teglio, Andrea
  • Cincotti, Silvano

Abstract

A discrete, deterministic, economic model, based on the framework of non-Walrasian or disequilibrium economics, is presented. The main feature of this approach is the presence of non-clearing markets, where not all demands and supplies are satisfied and some agents may be rationed. The model is characterized by three agents (i.e., a representative firm, a representative consumer, and a central bank), three commodities (i.e., goods, labour and money, each homogeneous) and three markets for their exchange. The imbalance between demand and supply in each market determines the dynamics of price, nominal wage and nominal interest rate. The central bank provides the money supply according to an operating target interest rate that is fixed accordingly to Taylor’s rule. The model has been studied by means of computer simulations. Results pointed out the presence of business cycles that can be controlled by proper policies of the central bank.

Suggested Citation

  • Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2006. "A dynamic general disequilibrium model of a sequential monetary production economy," Chaos, Solitons & Fractals, Elsevier, vol. 29(3), pages 566-577.
    • Handle: RePEc:eee:chsofr:v:29:y:2006:i:3:p:566-577
    DOI: 10.1016/j.chaos.2005.08.090
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    References listed on IDEAS

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    1. Drazen, Allan, 1980. "Recent Developments in Macroeconomic Disequilibrium Theory," Econometrica, Econometric Society, vol. 48(2), pages 283-306, March.
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    Cited by:

    1. Simone Casellina & Mariacristina Uberti, 2008. "Optimal Monetary Policy and Long-term Interest Rate Dynamics: Taylor Rule Extensions," Computational Economics, Springer;Society for Computational Economics, vol. 32(1), pages 183-198, September.
    2. Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2006. "A general equilibrium model of a production economy with asset markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 370(1), pages 75-80.
    3. Orlando Gomes, 2010. "Endogenous Growth, Price Stability And Market Disequilibria," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 3-34, February.
    4. Cajueiro, Daniel O. & Tabak, Benjamin M., 2007. "Time-varying long-range dependence in US interest rates," Chaos, Solitons & Fractals, Elsevier, vol. 34(2), pages 360-367.
    5. Marco Raberto & Andrea Teglio & Silvano Cincotti, 2008. "Integrating Real and Financial Markets in an Agent-Based Economic Model: An Application to Monetary Policy Design," Computational Economics, Springer;Society for Computational Economics, vol. 32(1), pages 147-162, September.
    6. Robert Jump, 2014. "Animal spirits and unemployment: a disequilibrium analysis," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(2), pages 255-274, October.

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