This thesis was stimulated throughout the time of my participation in a research project on Dynamic Macroeconomics, supported by the German Research Foundation (DFG). The starting point was the central question of how to integrate price setting firms in a dynamic disequilibrium model. Almost all recent literature on imperfect competition in macroeconomics applies the objective demand approach by assuming that firms know the true demand curve they are faced with. While this approach can be ap- plied in temporary monetary equilibrium models, it proves inadequate for formulating price adjustment in a dynamic disequilibrium model, where it has to be replaced by the concept of subjective demand. Based on this distinction, the thesis starts out with a comparison of the concepts of subjective and objective demand in an abstract framework and surveys the literature on general equilibrium theory with imperfect competition. The objective demand approach is criticized not only on the grounds of its strong rationality requirements and existence problems, but also by the observation that it cannot be applied successfully to characterize determinate rational expectations equilibria in intertemporal macroeco- nomics. Finally, price setting firms using subjective demand functions are integrated in a dynamic disequilibrium model in order to study mo- nopolistic and oligopolistic price adjustment.
| ISBN: | 9783540660293 |
| Publication date: | 19th August 1999 |
| Author: | Leo Kaas |
| Publisher: | Springer an imprint of Springer Berlin Heidelberg |
| Format: | Paperback |
| Pagination: | 155 pages |
| Series: | Lecture Notes in Economics and Mathematical Systems |
| Genres: |
Economic theory and philosophy |
This thesis was stimulated throughout the time of my participation in a research project on Dynamic Macroeconomics, supported by the German Research Foundation (DFG). The starting point was the central question of how to integrate price setting firms in a dynamic disequilibrium model. Almost all recent literature on imperfect competition in macroeconomics applies the objective demand approach by assuming that firms know the true demand curve they are faced with. While this approach can be ap- plied in temporary monetary equilibrium models, it proves inadequate for formulating price adjustment in a dynamic disequilibrium model, where it has to be replaced by the concept of subjective demand. Based on this distinction, the thesis starts out with a comparison of the concepts of subjective and objective demand in an abstract framework and surveys the literature on general equilibrium theory with imperfect competition. The objective demand approach is criticized not only on the grounds of its strong rationality requirements and existence problems, but also by the observation that it cannot be applied successfully to characterize determinate rational expectations equilibria in intertemporal macroeco- nomics. Finally, price setting firms using subjective demand functions are integrated in a dynamic disequilibrium model in order to study mo- nopolistic and oligopolistic price adjustment.
Dynamic Macroeconomics With Imperfect Competition features in the following genres: Economic theory and philosophy
Dynamic Macroeconomics With Imperfect Competition is available in Paperback
Dynamic Macroeconomics With Imperfect Competition was written by Leo Kaas and published by Springer an imprint of Springer Berlin Heidelberg
Dynamic Macroeconomics With Imperfect Competition has 155 pages
Yes it is part of Lecture Notes in Economics and Mathematical Systems series