A Steady-state Model Of A Non-Walrasian Economy With Three Imperfect Markets
Unemployment may depend on equilibrium in other markets than the labor markets. This paper addresses this old idea by introducing search frictions on several markets: in a model of credit and labor market imperfections as in Wasmer and Weil (2004), the author further introduce search on the goods market. The model can be solved by blocks: on two of the three markets, the relevant "Market tightness" is a constant of parameters. In particular, goods market tightness, expressed as the ratio of unmatched consumers to unmatched firms, is equal to 1 which corresponds to a stochastic Say's law: demand and supply are stochastically in equilibrium.