Abstract
As stated in the first chapter, this study is mainly concerned with the use of disequilibrium in empirical macro economics. There, we stressed that observations of economic variables usually refer to dynamic systems which as a rule are out of equilibrium. The lack of realism of the concept static equilibrium as a description of the actual economic situation is almost always evident.
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Notes to Chapter 2
Compare Shubik (1975, p. 557).
At any rate it seems a proper justification for the kind of models we present in Chapters 6 and 7.
Cf. Benassv (1976).
Cf. Beckmann and Ryder (1969), Barro (1972), Veendorp (1972), Iwai (1974a), (1974b), (1974c), Grossman (1974).
Cf. Iwai (1974a), (1974b), (1974c).
Iwai did not present an elaboration of the relevant model in (1974a) in this respect, but on the base of what he proves to hold for employment in (1974b) the possibility to generalize this result to sales seems rather obvious.
Cf. Phillips (1958).
The neglect of the dynamic adjustment process seems to be a drawback also in his context, as some of Benassy’s results appear to be affected by his identification of notional and effective demand (supply) in both markets.
Of the other relevant publications we mention: Alchian (1970), Barro and Grossman (1976), Eckstein and Fromm (1968), Grossman (1969), (1971), Malinvaud (1977), Nadiri and Rosen (1973), Nelson and Winter (1974), Radner (1972), Veendorp (1973) and Schwödiauer (1978).
All stages but the last one may be labeled ‘ex ante’.
Compare Iwai (1974b).
Such behaviour is possible if we assume e.g. in the case of consumer demand that the agent’s utility for a commodity increases extremely, if he could not satisfy his demand in the past. In general, however, it seems reasonable to assume that the direction of adjustment is in line with past frustrations.
A formal analysis of the relation between aggregate transactions on the one hand and aggregate demand and aggregate supply on the other in the case of aggregation over many markets will reveal that aggregate transactions will lie below the minimum of demand aggregated over the markets and aggregate supply, with a tendency towards the minimum if ex ante excess demand or ex ante excess supply tends to exist in almost all markets. The transactions curve for aggregate markets could have the same form as that in Fig. 2.2 to be discussed in the next section, but lie at a lower level. We will not elaborate this point — which I owe to Mr. B.H. Hasselman, Central Planning Bureau, The Hague — in this study, as it appears possible to deal with this complication by a redefinition of aggregate potential demand and aggregate potential supply, allowing for a normal fraction of qualitative discrepancy between demand and supply; cf. our treatment of a similar level—correction’ in the case of frictional unemployment (Lenderink and Siebrand, 1976).
In Lenderink and Siebrand (1976) we used a function of the hyperbolic tangent which had similar properties, at least in the relevant range. Cf. also Chapter 5.
J. Sandee (Central Planning Bureau, The Hague) suggested the use of the CES—function in this case to us; a similar function is used by P.J. Verdoorn et al. in the re—estimation of the short—term model 69—C, cf. Hasselman, Post and 50
Van den Beld (1977). An important point in favour of the CES—function is that it is easily extended to more than two factors; this property may become relevant in the case of interaction of operations in different markets.
Cf. Rose (1973) and Siebrand (1972 and Chapter 4
Cf. Chapter 6 for anticipations of potential demand and potential supply that are different for different aents
Cf. Iwai (1974c).
Cf. Beckman and Ryder (1969), Barro (1972), Veendorp (1972), Iwai (1974a), (1974b), (1974c and Benassv (1976.
Relevant Dutch studies are Pen (1950 and Verbaan (1971.
The manipulation of stocks —neglected here — may be another factor of major importance. Stock manipulation is an obvious disequilibrium adjustment mechanism. We deal with stock changes only incidentally in this study (cf. Chapter 4). The major reason for this omission is that ex ante/ex post treatment of stocks seems to require adequate short—term data which are not available for our primary country of reference, the Netherlands.
Obviously, the explanation of economic phenomena in terms of stockadjustment behaviour would lose much of its content if equilibrium was assumed to hold in any period. On the other hand economic analysis concentrating on the disequilibrium dynamics of adjustment of flows of volume variables evidently implies fluctuating divergencies between desired and actual stock—levels. The explicit recognition of the disequilibrium character of both types of analysis indicates a common basis of ‘Monetarist’ and ‘Keynesian’ macro economics.
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Siebrand, J.C. (1979). Quantity and price determination in disequilibrium. In: Towards Operational Disequilibrium Macro Economics. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-3561-2_2
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DOI: https://doi.org/10.1007/978-94-017-3561-2_2
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