Disequilibrium macroeconomics

Disequilibrium macroeconomics is a tradition of research centered on the role of disequilibrium in economics. This approach is also known as non-Walrasian theory, equilibrium with rationing, the non-market clearing approach, and non-tâtonnement theory. Early work in the area was done by Don Patinkin, Robert W. Clower, and Axel Leijonhufvud. Their work was formalized into general disequilibrium models, which were very influential in the 1970s. American economists had mostly abandoned these models by the late 1970s, but French economists continued work in the tradition and developed fixprice models.

In the neoclassical synthesis, equilibrium models were the rule. In these models, rigid wages modeled unemployment at equilibria. These models were challenged by Don Patinkin and later disequilibrium theorists. Patinkin argued that unemployment resulted from disequilibrium. Patinkin, Robert W. Clower, and Axel Leijonhufvud focused on the role of disequilibrium. Clower and Leijonhufvud argued that disequilibrium formed a fundamental part of Keynes's theory and deserved greater attention.

Robert Barro and Herschel Grossman formulated general disequilibrium models, in which individual markets were locked into prices before there was a general equilibrium. These markets produced "false prices" resulting in disequilibrium. Soon after the work of Barro and Grossman, disequilibrium models fell out of favor in the United States and Barro abandoned Keynesianism and adopted new classical, market-clearing hypotheses. However, leading American economists continued work with disequilibrium models, for example Franklin M. Fisher at MIT, Richard E. Quandt at Princeton University, and John Roberts at Stanford University.

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