On the dominance of the Keynesian regime in disequilibrium growth theory: A note

Abstract

This note shows that non-Walrasian disequilibrium models of monetary growth (which are rare) can be considerably simplified in their dynamics if appropriate flexibilities of market economies are taken into account that help to avoid certain types of rationing of economic agents as they are typical for the non-Walrasian modeling of macrodynamics. We consider and modify accordingly an established example of this type of model building and show that propositions on stability and the loss of stability of the then remaining Keynesian regime are much easier to derive and also much more transparent than in their original non-Walrasian setup with its regime switches right at the steady state of the economy.