Microeconomics

The key objective of this thesis is to explain how aggregate agent investment behavior, in the presence of a Giffen Good, leads to excess market volatility. The thesis relies on two microeconomic models. The first model demonstrates how, in the presence of a Giffen Good, the demand curve is discontinuous and upward sloping. By analyzing the demand curve, price regions of potential volatility are identified. Using the first model as a foundation, a second model is introduced in which a speculator trades in a dynamic setting. In this dynamic framework, opportunities for profit making by the speculator are identified. The speculative behavior aggravates market volatility.

In this thesis the literature of disequilibrium macroeconomic theory
was reviewed and the empirical relevance of the Keynesian interpretation
of the labor demand function was examined and contrasted to the
disequilibrium interpretation of Barro and Grossman, Patinkin's
disequilibrium theory of the labor market and Clower's partial
disequilibrium analysis of the commodity market were examined in depth.
The bulk of the literature review was devoted to the general disequilibrium
model of income and employment determination developed by Barro and
Grossman. Barra and Grossman's criticism of Keynes for predicting a
negatively sloped labor demand function was analyzed using regression
analysis to estimate the function. Barro and Grossman's criticism
was found to be based on insufficient evidence, and evidence presented
in this thesis supported the Keynesian position.

Culture Jammers, an activist guerilla-like movement, entered the global scene in the 1990s and, through public performances, attempt to draw attention to their claim that the US economic structure is facing a fundamental need to shift away from a consumer-oriented capitalist economy. As an alternative, the activists propose--True Cost economics, a model that would include the costs of negative production and consumption externalities in the pricing of commodities. In this paper, I focus on culture jammers' critique of neoclassical economics, more specifically, the clash of the--new paradigm (True Cost economics) and the old paradigm (neoclassical economics). In evaluating whether True Cost economics is a feasible alternative, I graphically examine how the True Cost solution and the neoclassical market model correct for negative externalities to reveal similarities in the two models.