Introduction

This chapter continues the examination of the mature comprehensive model. The first concern is to identify the structural properties of the second stage of the model, which Walras presented, like the first, in the lessons of the Eléments that also deal with new capital goods. It is shown how Walras began by identifying the components of national wealth, and then introduced business and consumer inventories and made explicit some features of the holding of money balances. The chapter goes on to examine the actions of the participants in the markets and the dynamic behavior of the variables, with particular attention to the market for new capital goods. In dealing with the behavior of the model in disequilibrium, it shows the reconciliation of two seemingly contradictory phenomena: the occurrence of trade only at equilibrium prices during the adjustment process, and the fact that the model is not in equilibrium at those prices.