| Popis: |
Based on the idea of basic separation of price and quantity adjustments, this chapter presents a new picture on how an economy as big as the world ordinarily works by the actions of agents whose capability is limited in rationality, sight, and actions. The first part (Sects. 2.2, 2.3, 2.4, 2.5, and 2.6) is devoted to showing why prices of industrial goods are stable. It gives a reason for price stability that is completely different from the standard menu-cost explanations. Section 2.7, which is an introduction to Chaps. 3, 4, 5, and 6, explains the mechanism by which the quantity adjustment proceeds in the economy as a whole. The result obtained in this chapter (and this book) is of paramount significance for the economics of the market economy, because this is the first result after Arrow and Debreu’s general competitive model that shows that “a social system moved by independent actions in pursuit of different values” can work without assuming an unrealistic capability for infinite rationality and complete information. |
