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Dynamic Macroeconomics with Imperfect Competition

  • Book
  • © 1999

Overview

Authors:
  1. Leo Kaas

    1. Department of Economics, Institute for Advanced Studies, Vienna, Austria

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Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 475)

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Table of contents (6 chapters)

  1. Front Matter

    Pages i-xi
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  2. Introduction

    • Leo Kaas
    Pages 1-10

  3. Subjective and objective equilibria

    • Leo Kaas
    Pages 11-27

  4. General equilibrium with imperfect competition

    • Leo Kaas
    Pages 29-58

  5. Intertemporal macroeconomic equilibrium

    • Leo Kaas
    Pages 59-103

  6. A dynamic macroeconomic model with price setting firms

    • Leo Kaas
    Pages 105-138

  7. Final remarks

    • Leo Kaas
    Pages 139-141

  8. Back Matter

    Pages 143-164
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Keywords

About this book

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.

Authors and Affiliations

  • Department of Economics, Institute for Advanced Studies, Vienna, Austria

    Leo Kaas

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