WALRAS-KEYNES EQUILIBRIA COORDINATION AND MACROECONOMICS

In decentralised market economies, supply-constrained equilibria may p ersist as coordination failures, sustained but not caused by price rig idities. This feature may be arbitrarily severe, even at prices compat ible with competitive equilibrium. The supply constraints may originat e in rational expectations. Some implications for macroeconomics are d rawn. The possibility of coordination failures explains why organised labour may resist wage flexibility. These features are illustrated in elementary macroeconomic prototypes, like RBC or Barro-Grossman-Malinv aud prototypes.