Econometrica: Jan 1970, Volume 38, Issue 1

Some Adjustment Problems

DOI: 0012-9682(197001)38:1<1:SAP>2.0.CO;2-2
p. 1-17

F. H. Hahn

This paper first takes a rather pessimistic look at what has been accomplished in recent years in understanding the "price mechanism." It then takes up two points in some detail. First, it is shown that stationary expectations do not ensure the convergence of all equilibrium paths on to a steady state in a neoclassical model with heterogeneous capital goods (an appendix works an example). Secondly, a tatonnement process is outlined and discussed for an economy with constant returns to scale.

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