Inmacroeconomic theory,general disequilibrium is a situation in which some or all of the aggregated markets, such as themoney market, the goods market, and thelabor market, fail to clear because ofprice rigidities.[1] In the 1960s and 1970s, economists such asEdmond Malinvaud,Robert Barro andHerschel Grossman,Axel Leijonhufvud,Robert Clower,andJean-Pascal Benassy investigated how economic policy would impact an economy where prices did not adjust quickly to changes in supply and demand.[1] The most notable case occurs when some external factor causes high levels of unemployment in an economy, leading to households consuming less and firms providing less employment, leading to a rationing of both goods and work hours.[citation needed] Studies of general disequilibrium have been considered the "height of theneoclassical synthesis"[2] and an immediate precursor to thenew Keynesian economics that followed the decline of the synthesis.[1]
Studies of general disequilibrium showed that the economy behaved differently depending on which markets (for example, the labor or the goods markets) were out of equilibrium. When both the goods and the labor market suffered fromexcess supply, the economy behaved according toKeynesian theory.[1]