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Macroeconomic Theory$
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Jean-Pascal Benassy

Print publication date: 2011

Print ISBN-13: 9780195387711

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780195387711.001.0001

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Nonclearing Markets and Imperfect Competition

Nonclearing Markets and Imperfect Competition

(p.85) 5 Nonclearing Markets and Imperfect Competition
Macroeconomic Theory

Jean-Pascal Bénassy

Oxford University Press

This chapter characterizes the Walrasian model and defines how it has to be generalized to deal with nonclearing markets and imperfect competition. It simply describes microfoundations of the more general theories already delineated. It also provides a simple macroeconomic example of price and quantity determination under assumptions on price and wage formation using: (1) Walrasian equilibrium, (2) rigid prices and wages, and (3) imperfect competition in the goods and labor markets. Lastly, the chapter reveals that the response to stochastic shocks and the resulting correlations between various variables depend in a fundamental manner on the assumptions on price and wage rigidities.

Keywords:   Walrasian model, microfoundations, Walrasian equilibrium, price, wage, imperfect competition

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