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What is Macro Instability and Self-Adjustment about?

This chapter discusses whether markets naturally self-adjust to return to equilibrium after a shock or if they may become unstable. It explores reasons markets may self-correct through flexible interest rates and prices, as well as reasons adjustments may worsen outcomes. A key concept is that leakages like savings must equal injections like investment for equilibrium. The multiplier process is described, where an initial spending decline is amplified through rounds of reduced income and consumption, leadin

Author

Sharath Menon

Language

EN