Close relations on the financial markets and irreducible unstable economic performances

Author:Madalina Antoaneta Radoi - Alexandru Olteanu
Position:Lecturer, Economic Sciences Faculty, 'Nicolae Titulescu' University, Bucharest - Professor, Economic Sciences Faculty, 'Nicolae Titulescu' University, Bucharest
Pages:181-190
Madalina Antoaneta Radoi • Alexandru Olteanu
181
LESIJ NR. XVIII, VOL. 2/2011
CLOSE RELATIONS ON THE FINANCIAL MARKETS AND
IRREDUCIBLE UNSTABLE ECONOMIC PERFORMANCES
Mdlina Antoaneta R;DOI*
Alexandru OLTEANU*
Abstract
The evolution of the market development of any kind registered an overlapping and
conditioning of financial markets and economic performances, reinforcing, after the 80’s, the
connections between the financial system and industrial economy in relation to the age of
conglomerates. Although the financial system uses its assumed functions of not being responsible
for the cyclic instability of the economies, which has a negative influence over the average rate of
economic growth over long periods, macroeconomic analyses reflect the financial origins of cyclic
instability.
Keywords: Neoclassical financial market, neoclassical general equilibrium model, basic
Walrasian model, strong-form and semi-strong financial market efficiency, capital markets
general equilibrium model, marginal efficiency of capital.
Introduction
The functioning of the markets is mainly based on two models, the “Neoclassical general
equilibrium model” and the “Basic Walrasian model”.
The neoclassical general equilibrium model comprises the general equilibrium properties
of commodities markets and capital goods and of financial markets. Within these we find the same
form: the atomicity of supply and demand, homogeneity of products, transparency of exchanges,
and mobility of financial resources. In a perfect competition, the free allocation of capital allows
continuously raising their economic performances at an optimal level.
The basic Walrasian model has multiple characteristics: economic and financial decisions
are made by rational individuals who are perfectly informed regarding market conditions at any
given moment; the markets have monopoly over the aggregation and alignment of supply and
demand; the so-called pure and perfect “competition” excludes all forms of power over prices; the
equilibrium prices are a result of anonymous forces.
The model brings a response to one of the problems that continue to be asked for over a
century. It incites to an approach based on the specificity of the nature of the relations between the
financial market and economic performances, taken as a whole.
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* Lecturer, Economic Sciences Faculty, “Nicolae Titulescu” University, Bucharest, radoimadalina@univnt.ro
* Professor, Economic Sciences Faculty, “Nicolae Titulescu” University, Bucharest (e-mail: aolteanu@univnt.ro)

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