A non-Walrasian model of the business cycle

This paper shows how the dynamic evolution of a short-run non-Walrasian equilibrium can generate cycles. The cyclic behavior of the system results from the combination of an unstable accelerator and of stabilizing price effects. The novelties of the model presented in this paper with respect to previous contributions in non-linear cycle theory are the use of a non-Walrasian equilibrium structure in the short run, and the fact that a cycle is obtained without having to assume any ad hoc shape for the various functions involved. Moreover the model bridges the gap between cycle theory and the traditional short-run IS-LM analysis.