Economics, Econometrics and Finance
8 years ago

Policy decisions at risk as feedback loops complicate market analysis

Public Finance Quarterly
The Welfare Significance and Nonsignificance of General Equilibrium Demand and Supply Curves
Walter N. Thurman

Paper Summary

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General equilibrium demand and supply curves help measure market effects of interventions in a single market. When feedback comes from both demand and supply, complications arise. The study shows that with one source of feedback, these curves are significant. But with multiple sources, the analysis is invalidated, and the curves become policy-dependent.