Abstract

A standard Ricardian model is completed with the introduction of a market for land. If the economy were endowed with enough future markets, it would have no equilibria. The economy does however admit temporary equilibria of two types. The first uses equilibrium expectations; full employment instantaneous equilibrium can exist, but it can last only for a finite period, it is characterized by booms and slumps and it enjoys very strange comparative static properties. The second uses more far-sighted expectations; equilibrium is much better behaved but it is riddled with Keynesian problems.