Some Conditions of Macroeconomic Stability

Hawkins, David

doi:10.2307/1909272

Cited by 67 publications

(42 citation statements)

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“…It is Assumption (e) in (1951a, p. 148) or Postulate C 1 in (1951b, p. 53). This property is equivalent to the HawkinsSimon conditions for matrix I − A (Gale and Nikaido 1965;Hawkins 1948;Hawkins and Simons 1949). Invertibility is satisfied in particular if the input-output matrix I − A is diagonal dominant.…”

Section: Consumption Goods As Inputsmentioning

confidence: 99%

Factor proportionality in multiple households closed CGE models: theory and illustrations

Balasko

Tourinho

2014

Econ Theory Bull

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The factor contents of different consumers' consumption bundles computed from a country's CGE model with multiple households are seen to be proportional or almost proportional in the case of four different countries, namely USA, Brazil, Spain and Ivory Coast. These countries have been chosen because of the existence for these countries of CGE models with multiple households (by opposition to a representative consumer) and good quality data. This study has been limited to these four countries because we thought that the implications for CGE modeling of our findings should not delay any further their publication even though further studies are obviously needed. Taken as a law, we show that proportionality of factor contents at equilibrium for all endowment vectors and fixed preferences implies that households' implicit preferences for factor contents are identical and homothetic. Another consequence is that factor and goods' equilibrium prices are unique and depend only on total factor resources, not on the distribution of these factors between households. Factor proportionality may therefore be at the root of the puzzling rigidity and uniqueness of equilibrium prices of goods and factors observed in CGE models with multiple households. Electronic supplementary material The online version of this article

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Section: Consumption Goods As Inputsmentioning

confidence: 99%

Factor proportionality in multiple households closed CGE models: theory and illustrations

Balasko

Tourinho

2014

Econ Theory Bull

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“…We use numerical methods to approximate the function u (r t − ρ t ) from conditions (21) and (20). Once the function u (r t − ρ t ) is computed, we use (20) and (3) to find the exchange rate and the interest rate differential, respectively.…”

Section: The Target Zonementioning

confidence: 99%

“…From (45) we know that m c (l) < 1, this is a sufficient condition to verify the Hawkins-Simon condition (see Brauer-Solow Theorem). In turn, verification of the Hawkins-Simon condition implies that η * (M ) < 1, (see Hawkins and Simon [20] and [21]). Then, matrix (I − M )…”

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confidence: 98%

The Optimal Degree of Exchange Rate Flexibility: a Target Zone Approach*

López

Mendizábal

2007

Rev International Economics

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This paper presents a benchmark model that rationalizes the choice of the degree of exchange rate flexibility. We show that the monetary authority may gain efficiency by reducing volatility of both the exchange rate and the interest rate at the same time. Furthermore, the model is consistent with some known stylized facts in the empirical literature on target zones that previous models were not able to generate jointly, namely, the positive relation between the exchange rate and the interest rate differential, the degree of non-linearity of the function linking the exchage rate to fundamentals and the shape of the exchange rate stochastic distribution.

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“…The potential instability of markets was recognized as a problem in the economics literature in the 1930s, where the use of static analysis techniques ("cobweb diagrams") was used to study the stability of markets [1]. Differential equation analysis of the stability of markets is described in [2,3,4,5] and in many other economics references. This paper uses differential/algebraic equations and eigenvalue techniques to study power system markets.…”

Section: Introductionmentioning

confidence: 99%

The stability of power system markets

Alvarado

1999

IEEE Trans. Power Syst.

112

101

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Market equilibrium conditions can be derived from more general dynamic equations describing the marketplace. Dynamic equations provide insights into the behavior and stability of markets which are not available from static models. For example, markets with a single supplier with declining linear costs (economies of scale) may or may not be stable, depending on specific cost characteristics. Markets with more than one supplier with declining linear costs are always unstable. This paper illustrates a situation where the removal of congestion makes a market unstable.

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Some Conditions of Macroeconomic Stability

Cited by 67 publications

References 0 publications

Factor proportionality in multiple households closed CGE models: theory and illustrations

Factor proportionality in multiple households closed CGE models: theory and illustrations

The Optimal Degree of Exchange Rate Flexibility: a Target Zone Approach*

The stability of power system markets

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