FACTORS OF MARKET EQUILIBRIUM AND ECONOMIC WELFARE
DOI:
https://doi.org/10.32689/2523-4536/77-5Keywords:
market equilibrium, general equilibrium, welfare economics, situation of the population, sustainable developmentAbstract
The article considers theoretical approaches to defining the concepts of "market equilibrium" and "economic welfare" and in the relationship between them. An analysis of recent studies and publications is conducted, which consider individual aspects of the relationship between market equilibrium factors and their impact on the level of economic welfare of the country. A macroeconomic model is proposed based on existing approaches on the conception of a production function curve of the Cobb-Douglas type with its further expansion to the level of general economic equilibrium. This model allows for the analysis and assessment of the impact of individual instruments of state regulation on the level of output, employment and income structure, taking into account the price level. The proposed model can be used similarly to models such as the "Keynesian cross", the Solow model, IS-LM. The "fundamental theorem of economics" is formulated regarding the existence of an arbitrary state of equilibrium. The relationship of economic variables we obtained can also better explain the extreme deviations of the Phillips curve caused by both commodity shocks to aggregate supply and during the expansion of economic grow due to technological shifts (breakthroughs). The model can also better explain the Kuznets hypothesis. The desire of economic agents to maximize profits leads, despite generally accepted beliefs, to the establishment of general equilibrium at a level significantly lower than the potential output, further growth in income inequality and, accordingly, to a lower level of economic welfare of the country. The government attempts to redistribute public income in order to equalize existing and potential imbalances or to make investments to finance large and socially necessary projects are ultimately leveled by the same mechanism of market equilibrium. Certain approaches are also proposed to introduce new organizational and economic forms of interaction in the production of goods and services, taking into account the interests of all stakeholders.
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