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2001
- handle: 10670/1.baws5u
- hal: hal-00597197
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Alessandro Citanna et al., « Continua of Underemployment Equilibria Reflecting Coordination Failures, Also at Walrasian Prices », HAL-SHS : économie et finance, ID : 10670/1.baws5u
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Résumé
In this paper the existence of unemployment is partly explained as being the result of coordination failures. It is shown that as a result of self-fulfilling pessimistic expectations, even at Walrasian prices, a continuum of equilibria results, among which an equilibrium with approximately no trade and a Walrasian equilibrium. These coordination failures also arise at other price systems, but then unemployment is the result of both a wrong price system and coordination failures. Some properties of the set of equilibria are analyzed. Generically, there exists a continuum of non-indifferent equilibrium allocations. Under a condition implied by gross substitutability, there exists a continuum of equilibrium allocations in the neighborhood of a competitive allocation, when prices are Walrasian. For a specialized economy, a dynamic illustration is offered.