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EXCESS DEMAND AND MARKET ADJUSTMENT
Author(s) -
ORDER ROBERT Van
Publication year - 1976
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1976.tb00443.x
Subject(s) - microfoundations , economics , phillips curve , microeconomics , wage , stability (learning theory) , econometrics , mathematical economics , keynesian economics , macroeconomics , unemployment , labour economics , computer science , machine learning
This paper develops a model of wage and price adjustment that is based on the optimizing behavior of firms. The output of the model is a relationship between price changes and excess demands that looks like a generalized Walrasian adjustment but which is based on firm microfoundations. The model is then applied to stability analysis and the “Phillips curve,” using restrictions derived from the underlying optimization to generate results.