AJUSTEMENT VERS L'ÉQUILIBRE DE LONG TERME
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MICRO ADJUSTMENT TOWARD LONG-TERM EQUILIBRIUM
A dynamic model is constructed, in which the behavior of economic agents is based on adjustment. Decisions are made in disequilibrium: prices respond to differences between supply and demand (inventories), capital is moved according to profitability differentials, and money is issued by a bank which reacts to the general price level. A proof of local stability of long-term equilibrium with production prices is demonstrated. We further distinguish between two aspects of the stability problem: concerning the allocation of capital and relative prices, "stability in proportions", and with respect to the general levels of activity and prices, "stability in dimension".
G. Duménil, D. Lévy, "Micro Adjustment Toward Long-Term Equilibrium", 1991, Journal of Economic Theory, Vol. 53(2), pp. 369-395.
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