Out-of-equilibrium price dynamics and the inflationary process

Out-of-equilibrium price dynamics are studied using agent-based computational models. We examine how agents with bounded rationality act in an environment in which they do not know precisely both relative prices and the level of the prices. We model imprecision and uncertainty with fuzzy numbers and use the theory of probabilistic sets as part of the simulation model. Our results explain both positive and negative correlations between output and inflation based on consumer behavior.