Stable quantities in fixed price disequilibrium
Recent work in the area of non-Walrasian process analysis has focused on three primary deficiencies in the Walrasian tatonnement assumptions. These are the Walrasian neglect of endowment and spillover effects together with the failure to assign a special role for money. In detail: First, it has long been known that if trade takes place during the process of price adjustment, the resulting capital gains and losses coupled with the change in the distribution of commodities will tend to shift the position of the equilibrium. (For an early source, see 18, Book V, Chap. II].) This leaves the system with the problem of trying, so to speak, to close in on a moving target. This is the endowment effect. Surprisingly, Hahn, Negishi, and others (see 17; 1, Chap. 131) h ave found that stability follows in this class of models more readily than in Walrasian models. Second, Clower ]3] and Patikin [ 9, Chap. XIII] have argued that if trade takes place away from equilibrium, we should expect that non-zero excess demands in some markets will influence trading plans in other markets. This is the spillover effect. The classic case is that if a worker on the long side of the labor market cutting his planned consumption below its Walrasian level. Because of spillovers, the demands which actually get expressed in the marketplace can differ significantly, even in sign, from the demands which the Walrasian auctioneer responds to. Initially there was speculation that spillovers would generate instability and/or unemployment equilibria; but thus far the theoretical results are mixed (compare, for example, [ 11, IO]). Finally, Clower [4J has argued that the Patikinesque macromoney-general equilibrium models have not succeeded in formally distinguishing between money and other durables as a means of payment. Noting that the Walrasian budget constraint implicitly allows trading in any pair of commodities, he urges that a tighter restriction be introduced in the interest of enforcing the rule-“Money buys goods, and goods buy money; 302 0022.0531/81/050302-12502.00/O