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The Triple Monetary, Fiscal and Real Equilibrium, and the General Equilibrium (SWI Model)
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Mohsen Rezaiee *   |
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Abstract: (15199 Views) |
| Say’s law and Walrasian equilibrium are simply for a barter economy. In a monetary and trade economy, Say’s law and Walrasian equilibrium need to be revised. By introducing the financial and monetary intermediaries as a third factor together with their respective markets in the general equilibrium model, the traditional economic theory can be improved. The money which leaves the economic activity by becoming a financial asset enters this process as financial capital and credit. This would not only add the monetary and financial markets to the real economic activities, but also influences the monetary and financial processes, thereby affecting wealth and production. Monetary and fiscal variables therefore affect the real economic variables via expenditure (investment) and income (saving). The traditional models such as IS-LM have not yet been able to explain this interaction in a precise and comprehensive manner. The model presented here has described the fiscal, monetary and real economic relationships in a new format and approach. |
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| Keywords: Say’s Law, General Equilibrium, Financial and Monetary Markets, Economic Real Section |
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Full-Text [PDF 1075 kb]
(8090 Downloads)
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Type of Study: Research |
Subject:
General
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