Real Disequilibrium and Financial Equilibrium
(1989) , 25 pages
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- Authors
- Abstract
- Over the last years several attempts have been made to explain the behavior of the Uruguayan economy with the help of “disequilibrium theory”. Most notably, these studies have shown that capacity constraints have a significant influence on production, and that Tobin's q is an important factor in the explanation of investment. But how do we explain stock market prices? The central point in our framework is to combine financial equilibrium (the Capital Asset Pricing Model) and real disequilibrium (the Malinvaud Model), through expectations: in the financial markets the expectations about risk and returns depend on the expectations about the variables that characterize the disequilibrium on the real markets. The theoretical set-up is developed in Licandro (1989) and should be seen as a first step towards the integration of real disequilibrium models in financial equilibrium analysis.
- Affiliations
Citations
Licandro, O. (1989). Real Disequilibrium and Financial Equilibrium (Working Papers Institut des sciences économiques 8915). https://hdl.handle.net/2078.5/281061