The paper considers a dynamic macroeconomic model with stochastic quantity rationing. The economy is composed of overlapping-generations consumers, producers and a government who interact in a labor and a consumption goods market. Agents behave optimizing and trade in each period, even when...

<Para ID="Par1">In the present paper uncertainty over the market price of a risk-neutral competitive firm’s output and limited liability imply the possibility of bankruptcy, give rise to moral hazard and entail that the firm’s output decision depends on its equity holding. Subjecting the firm to a...</para>

The effect of an increase in wage rates on employment and production in a state of Keynesian unemployment was studied by Malinvaud (1977). In his analysis, Malinvaud assumes a deterministic rationing model. We replace this hypothesis by an assumption of stochastic rationing. Transaction...