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Market Clearing (market + clearing)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	80%

Selected Abstracts

Algorithmic challenges and current problems in market coupling regimes

EUROPEAN TRANSACTIONS ON ELECTRICAL POWER, Issue 4 2009
Bernd Tersteegen
Abstract Increasing cross-border trade at European borders has lead to the necessity of an efficient allocation of scarce cross-border capacities. Explicit auctions used to be the commonly applied auction method in the past at most borders, but due to the separation of the trade of electrical energy and the allocation of cross-border capacity, market inefficiencies arise. As a consequence, a trend toward a market coupling, which combines the trade of electrical energy with the allocation of cross-border capacity, can be observed across Europe. The most convincing approach to solve the complex optimization task associated with market couplings solves the problem by a maximization of the system-wide welfare based on a closed-form optimization. Practical experience shows that problems remain with such an approach. This paper thoroughly analyzes problems that may occur in market coupling regimes with a closed-form optimization. In this paper an extension of formerly presented formulations of the optimization problem is presented, which avoids the described problems. The extended formulation still assures practically feasible calculation times of far less than 10 minutes even for systems with up to 12 market areas. Further, a fair and transparent approach to determine feasible market clearing prices not neglecting the time and market coupling relationship between prices is shown in this paper and it is demonstrated that this approach does not lead to practically infeasible calculation times. Copyright © 2009 John Wiley & Sons, Ltd. [source]

ENDOGENOUS GROWTH, PRICE STABILITY AND MARKET DISEQUILIBRIA

METROECONOMICA, Issue 1 2010
Orlando Gomes
ABSTRACT Resorting to an endogenous growth framework, the paper studies the implications of taking market clearing as a long-term possibility rather than an every period implicit assumption, as in conventional growth analysis. The underlying main assumption respects to an adjustment mechanism in which: (1) transitional dynamics are characterized by the persistence of an accumulated market imbalance, and (2) monetary authorities are able to guarantee price stability. The implications of this modeling structure are the following: (1) a market-clearing equilibrium may co-exist with other equilibrium points, (2) several types of stability outcomes are obtainable, and (3) monetary policy becomes relevant for growth. [source]

THE FISCAL THEORY OF THE PRICE LEVEL: A CRITIQUE*

THE ECONOMIC JOURNAL, Issue 481 2002
Willem H. Buiter
This paper argues that the `fiscal theory of the price level' (FTPL) has feet of clay. The source of the problem is a fundamental economic misspecification. The FTPL confuses two key building blocks of a model of a market economy: budget constraints, which must be satisfied identically, and market clearing or equilibrium conditions. The FTPL asssumes that the government's intertemporal budget constraint needs to be satisfied only in equilibrium. This economic misspecification has far-reaching implications for the mathematical properties of the equilibria supported by models that impose the structure of the FTPL. It produces a rash of contradictions and anomalies. [source]

DID THE MARKET-CLEARING POSTULATE PRE-EXIST NEW CLASSICAL ECONOMICS?

THE MANCHESTER SCHOOL, Issue 3 2007
THE CASE OF MARSHALLIAN THEORY
Have new classicists invented market clearing or have they just rehabilitated it? This is the question addressed in the present paper. It is generally agreed that market clearing underpins Walrasian theory, so my exploration is limited to the question of whether this is also true for Marshallian theory. I will claim that this is broadly the case: once Marshallian theory is properly reconstructed, it exhibits market clearing as a constantly present result. Still, an important difference between market clearing à la Walras and market clearing à la Marshall exists: in the former market clearing is equilibrium, while in the latter market clearing can coexist with disequilibrium. Next, I investigate whether my conclusion extends to the labour market. Again the conclusion reached is affirmative both for Marshall's theory and for present-day Marshallian models. As to the latter, I take Friedman's Phillips curve model as a case study. I show that this is a market-clearing model in which, strictly speaking, there is no place for the concept of unemployment,quite an ironical result for the paper that introduced the notion of the natural rate of unemployment! [source]