On the macroeconomics of uncertainty and incomplete markets
(2001) Recherches économiques de Louvain — Vol. 67, n° 1, p. 5-30 (2001)
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- Abstract
- 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 by-pass price and wage rigidities.
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Citations
Dreze, J. (2001). On the macroeconomics of uncertainty and incomplete markets. Recherches économiques de Louvain, 67(1), 5-30. https://hdl.handle.net/2078.5/250210 (Original work published 2001)