temporary equilibrium

Price expectations in neo-Walrasian equilibrium models. Assessing the developments of Hicks's standpoint

Since the late 1960s, research in the field of general equilibrium theory has focused on economies in which spot markets for commodities coexist with some asset markets and trade takes place sequentially over time. The study of ‘sequential economies’ has developed along two paths inspired by Hicks’s Value and Capital, which stress the dependence of agents’ choices on their expectations of future prices. The first is temporary equilibrium theory, in which expectations are subjective.

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