Disequilibrium in one market can affect demand or supply in other markets. Specifically, if an economic agent is constrained in one market, his supply or demand in another market may be changed from its unconstrained form, termed the notional demand, into a modified form known as effective demand. If this occurs systematically for a large number of market participants, market outcomes in the latter market for prices and quantities transacted (themselves either equilibrium or disequilibrium outcomes) will be affected.
If the supply of mortgage credit to potential homebuyers is rationed, this will decrease the demand for newly built houses.
If labourers cannot supply all the labor they wish to, they will have constrained income and their demand in the goods market will be lower.
If employers cannot hire all the labor they wish to, they cannot produce as much output as they wish
The debate between protagonists of the equilibrium paradigm and the disequilibrium paradigm has a strong ideological flavor. Proponents of one view frequently think that the alternative view is worthless or downright silly. A few years ago, one of us gave several seminars on the question of how one would test the null hypothesis that [potential data is generated] from an equilibrium as opposed to a disequilibrium specification. On some occasions (mostly in the U.S.), five minutes into the seminar it would be interrupted with the remark, 'What you are trying to do is silly, because everybody knows that prices always clear markets and therefore there is nothing to test.' At other times (mostly in Europe) the interruption took the form, 'What you are trying to do is silly, because everybody knows that prices never clear markets and therefore there is nothing to test.'
^Jacques H. Drèze. 1987. "Underemployment Equilibria: From Theory to Econometrics and Policy" [First Congress of the European Economic Association, Presidential Address] European Economic Review, 31: 9—34. Reprinted in Drèze 1993: Underemployment Equilibria: Essays in Theory, Econometrics and Policy, Cambridge University Press, Cambridge, 1991.
^ abc"From uncertainty to macroeconomics and back: an interview with Jacques Drèze", Pierre Dehez and Omar Licandro. Macroeconomic Dynamics, 9, 2005, 429–461.
Malinvaud and Fitoussi, editors, Unemployment in Western Countries.
"Profitability and Unemployment", 1980.
"Théorie macroéconomique", 2 volumes, 1981-2.
"Mass Unemployment", 1984
^ ab*Drèze, Jacques H.; Malinvaud, Edmond. 1994. 'Growth and employment: The scope for a European initiative', European Economic Review 38, 3—4: 489—504.
Drèze, Jacques, E. Malinvaud, P. De Grauwe, L. Gevers, A. Italianer, O. Lefebvre, M. Marchand, H. Sneesens, A. Steinherr, Paul Champsaur, J.-M. Charpin, J.-P. Fitoussi & G. Laroque (1994) "Growth and employment: the scope for a European initiative". European Economy, Reports and Studies 1, 75–106.
^ abUnemployment: Macroeconomic Performance and the Labour Market, Richard Layard, S. Nickell and R. Jackman) Oxford University Press, 2nd ed., 2005.
Sneessens, Henri B. 1981. Theory and Estimation of Macroeconomic Rationing Models. Springer-Verlag Lecture Notes in Economics and Mathematical Systems, Volume 191.
Lambert, Jean-Paul. 1988. Disequilibrium Macroeconomic Models: Theory and Estimation of Rationing Models Using Business Survey Data. Cambridge UP.
^Jacques H. Drèze, Charles R. Bean, JP Lambert. 1990. Europe's Unemployment Problem. MIT Press. This book has chapter-versions of the following refereed articles:
Henri R. Sneessens and Jacques H. Drèze. 1986. "A Discussion of Belgian unemployment, combining traditional concepts and disequilibrium econometrics." Economica 53: S89—S119. [Supplement: Charles Bean, Richard Layard, and Stephen Nickell, eds. 1986. The Rise in Unemployment. Blackwell]
Jacques H. Drèze and Charles Bean. 1990. "European unemployment: Lessons from a multicountry econometric study." Scandinavian Journal of Economics Vol 92, No. 2: 135—165 [Bertil Holmlund and Garl-Gustaf Löfgren, eds. Unemployment and Wage Determination in Europe. Blackwell. 3—33. In Dréze 1993.]
^Roberts, J. (1987). "An equilibrium model with involuntary unemployment at flexible, competitive prices and wages". American Economic Review. 77: 856–74.