Abstract
This paper examines the Friedman-Phelps‘expectational (dis)equilibrium’ and the Clower-Leijonhufvud‘non-market-clearing’ paradigms as alternative disequilibrium theories, and draws their respective policy implications. Then, these paradigms are taken as complementary to each other, as containing necessary ingredients for a synthetic disequilibrium theory, whose policy implications can only tentatively be explored. A general disequilibrium theory is founded on the notion of ‘disequilibrium consciousness’ and on a detailed characterization of ‘conjectural’ price and/or quantity responses to non-market-clearing, whose quasi-equilibrium outcome is conditioned by both expectations and the intra-market spillover effect.
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