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| Author: | Kaas, L. |
| Title: | Multiplicity of Cournot equilibria and involuntary unemployment |
| Journal: | Journal of Economic Theory
1998 : JUN, VOL. 80:2, p. 332-349 |
| Index terms: | EQUILIBRIUM THEORY UNEMPLOYMENT PRODUCTS MARKETS |
| Language: | eng |
| Abstract: | In an overlapping generations model with Cournot competition on the goods market it is shown that a continuum of stationary states and perfect foresight trajectories exists with unemployment at arbitrary low wages. Decisive for this is the influence that different forecast functions have on the objective demand curve, even though they are consistent with perfect foresight. With an example it is shown in the paper that simple adaptive and constant memory forecast rules generate such unemployment equilibria. The corresponding temporary equilibrium dynamics may display stable unemployment and unstable full employment equilibria. |
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