<p>Look at textbook definitions of equilibrium in macro models of General Equilibrium with production and investment. Basically, the Equation <span class="math-container">$Y_t=C_t+I_t$</span> that says that the amount produced at a certain period must equal the consumption plus investment in that period is the relevant market-clearing condition in the market for goods.</p>

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2019-07-25T19:32:30.287Z
2019-07-25T19:32:30.287Z
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<p>In pure exchange GE models, a typical goods market clearing condition for good <span class="math-container">$n$</span> looks like:</p>

<p><span class="math-container">$$\sum\limits_{i=1}^Ic_n^i=\sum\limits_{i=1}^Ie_n^i.$$</span></p>

<p>Consider a model with production where firms can pay dividends and invest in new capital. New capital can be produced from output goods using a linear technology.</p>

<p><strong>My Question:</strong> Taking the existence of dividends and investment into account, how does the goods market clearing condition look like in this case?</p>

<macroeconomics><microeconomics><general-equilibrium>
Market Clearing with Dividend and Investment
Frank Swanton
# Market Clearing with Dividend and Investment

(Asked by: username_0 on 2019-07-23)

In pure exchange GE models, a typical goods market clearing condition for good $n$ looks like:

$$\sum\limits\_{i=1}^Ic\_n^i=\sum\limits\_{i=1}^Ie\_n^i.$$

Consider a model with production where firms can pay dividends and invest in new capital. New capital can be produced from output goods using a linear technology.

**My Question:** Taking the existence of dividends and investment into account, how does the goods market clearing condition look like in this case?

**Tags:** macroeconomics, microeconomics, general-equilibrium


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## 1 answers

### Answer by username_1 on 2019-07-25. Score: 0 | Accepted answer

Look at textbook definitions of equilibrium in macro models of General Equilibrium with production and investment. Basically, the Equation $Y\_t=C\_t+I\_t$ that says that the amount produced at a certain period must equal the consumption plus investment in that period is the relevant market-clearing condition in the market for goods.


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