Production prices and dynamic stability: results and open questions

Article Abstract:

Cross-dual dynamic models assume that prices depend on excess demand and on planned production, while full-cost models assume that prices depend on cost of production plus mark-up. These two models are evaluated in order to analyze the relationship of production price to actual price. Covergence and gravitation towards equilibrium is examined in the context of dynamic stability theory. The findings indicate that cross-dual models result in unstable discrete-time models, while full-cost models are stronger, albeit short-term in scope.

Prices and rates, Microeconomics, Production (Economics), Cost (Economics), Costs (Economics), Dynamical systems

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Psychological thresholds, demand and price rigidity

Article Abstract:

Diagrammatic analysis is used to explain wage and price inflexibility via consumer theory. Threshold behavior is examined in the context of the product market and consequently extended to macroeconomic analysis. Psychological thresholds provide an additional explanation for kinked demand curves other than asymmetric information. Given that empirical studies indicate that such exist, threshold behavior could become a major factor in consumer theory.

Psychological aspects, Consumer behavior, Keynesian economics, Wage price policy, Demand functions (Economics), Demand functions, Wage-price policy

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Thresholds in financial development and economic growth

Article Abstract:

The linkage between financial development and long-term economic growth is analyzed via a model that incorporates five criteria. Results show that such a relationship is reciprocal and generates many equilibria for endogenous growth. Crucial variables include capital efficiency and the level of savings. Several poverty traps are pinpointed and incorporated in the analysis to make the model as useful as possible.

Economic development, Financial markets

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