On the Macroeconomics of Uncertainty and Incomplete Markets
نویسنده
چکیده
Presidential address for the Twelfth World Congress of the International Economic Association, summarising semi-formally the author's recent work and concerns. Uncertainty and incomplete markets breed demand volatility as well as price and wage rigidities. The conjunction of these leads to multiple, volatile supply-constrained equilibria, typically reflecting coordination failures and apt to display persistence as documented by three supporting theorems. Specific implications are linked to the conclusions that we should take coordination failures seriously, try to obviate demand volatility and try to bypass price and wage rigidities. *Presidential Address for the Twelfth World Congress of the International Economic Association, Buenos Aires, August 1999; also presented as the second Kurt W. Rothschild Lecture, University of Linz, November 1999. I thank Heracles Polemarchakis and Henri Sneessens for editorial comments.
منابع مشابه
Oil Price Uncertainty in the Iranian Economy
T he relationship between the price of oil and the level of economic activity is a fundamental empirical issue in macroeconomics. In this research, by using a multivariate GARCH-in-Mean VAR, we try to investigate direct effects of uncertainty of oil price on macroeconomics of Iran by using annually data from 1965 to 2013.Results show that uncertainty about oil prices had a negative a...
متن کاملUncertainty Outside and Inside Economic Models
Asset pricing theory has long recognized that financial markets compensate investors who are exposed to some components of uncertainty. This is where macroeconomics comes into play. The economy-wide shocks, the primary concern of macroeconomists, by their nature are not diversifiable. Exposures to these shocks cannot be averaged out with exposures to other shocks. Thus, returns on assets that d...
متن کاملAn Introduction to General Equilibrium with Incomplete Asset Markets*
The theory of general equilibrium with incomplete asset markets (GEI) studies the pricing of securities and commodities, and the interactions of perfectly competitive asset markets and commodity markets in determining consumption and investment. Since financial economics is fundamentally concerned with the pricing of securities, and since macroeconomics is fundamentally concerned with the real ...
متن کاملRecent Advances in Understanding Competitive Markets
The Arrow-Debreu model of competitive markets has proven to be a remarkably rich and °exible foundation for studying an array of important economic problems, ranging from social security reform to the determinants of long-run growth. Central to the study of such questions are many of the extensions and modi ̄cations of the classic Arrow-Debreu framework that have been advanced over the last 40 y...
متن کامل