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Towards A Reconstruction of Keynesian Economics: Expectations and Constrained Equilibria / J. Peter Neary, Joseph E. Stiglitz.
- Format:
- Book
- Author/Creator:
- Neary, J. Peter.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w0376.
- NBER working paper series no. w0376
- Language:
- English
- Subjects (All):
- Equilibrium (Economics)--Econometric models.
- Equilibrium (Economics).
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Towards A Reconstruction of Keynesian Economics
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1979.
- Cambridge : National Bureau of Economic Research, 1979.
- Summary:
- A two-period model of temporary equilibrium with rationing is presented, paying particular attention to agents' expectations of future constraints. it is shown that with arbitrary constraint expectations many different types of current equilibria may be consistent with the same set of (current and expected future) wages and prices, and that constraint expectations tend to be self-fulfilling (e.g., a higher expectation of Keynesian unemployment tomorrow increases the probability that it will prevail today). In addition, rational constraint expectations (i.e., perfect foresight of future constraint levels) are shown to enhance rather than reduce the effectiveness of government policy.
- Notes:
- Print version record
- August 1979.
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