Publisher's Synopsis
This book is an original and rigorous effort to incorporate into modern general equilibrium macroeconomics an analysis of the transactions and accumulation behavior of individuals. It has become widely recognized that much of the demise of contemporary macroeconomic analysis is attributable to the absence of a foundation in microeconomic and general equilibrium theory. This study attempts to remedy these shortcomings. The author first investigates the way individual agents trade and accumulate money, bonds, and goods over their life cycle. The explicit introduction of trading costs in the form of a transactions technology sets this analysis apart from the available literature. The author then examines the consequences of these results for the behaviour of the economy as a whole. The role of a government in aiding the economy to attain an efficient equilibrium is discussed. Finally, the author analyzes the behaviour of prices, quantities traded, and assets held when information is incomplete and markets do not clear instantaneously. In this situation the learning behaviour of the individual determines the dynamics of the system.
