The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Temporary Equilibrium

  • J.-M. Grandmont
Reference work entry


Temporary general equilibrium views the dynamic evolution of an economy as taking place sequentially in calendar time, with decisions being made and equilibrium being achieved at each date in the light of the traders’ expectations about the future. The article surveys the contributions of the field to the microeconomic foundations of macroeconomics, in particular to the analysis of monetary phenomena, non-clearing markets, imperfect competition and the foundations of Keynesian unemployment, as well as the study of economic dynamics and (in) stability of self-fulfilling expectations under various learning schemes, in relation in particular with ‘excess volatility’ of financial markets.


Arbitrage Capital market imperfections Classical dichotomy Equilibrium theory Error learning models E-stability Excess volatility Expectations Fiat money Futures markets Game theory Imperfect competition Intertemporal equilibrium Intertemporal substitution effects Keynesian unemployment Liquidity trap Local stability Microfoundations Monopolistic competition New Keynesian macroeconomics Non-clearing markets Oligopolistic competition Quantity theory of money Real balance effect Self-fulfilling expectations Speculation Staggered price and wage setting Sticky information Say’s Law Temporary equilibrium Uncertainty principle Walras’s Law Wealth effect 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • J.-M. Grandmont
    • 1
  1. 1.