Uncertainty and Endogenous Selection of Macroeconomics Equilibrium

Scaramozzino, Pasquale and Vulkan, Nir (2004) Uncertainty and Endogenous Selection of Macroeconomics Equilibrium. Metroeconomica, 55 (1). pp. 22-40.

Abstract

This paper presents a model of coordination failures based on market power and local oligopoly. The economy exhibits a multiplicity of Pareto-ranked equilibria. The introduction of uncertainty generates an endogenous equilibrium selection process, due to a strategic use of information by firms. The economy is more likely to settle on some equilibria than on others. We argue that a full understanding of these robustness criteria is needed before any policy which is intended to help coordinate the level of activity to a Pareto-dominant outcome can be successfully implemented.

Item Type: Article
Keywords: Microfoundations; co-ordination failure; equilibrium selection; finance
Subject(s): Complexity
Entrepreneurship
Finance
Centre: CABDyN Complexity Centre
Entrepreneurship Centre
Date Deposited: 21 Feb 2012 20:54
Last Modified: 02 Mar 2017 14:16
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2965

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