IDEAS home Printed from https://ideas.repec.org/a/oup/qjecon/v103y1988i3p441-463..html
   My bibliography  Save this article

Coordinating Coordination Failures in Keynesian Models

Author

Listed:
  • Russell Cooper
  • Andrew John

Abstract

This paper focuses on the importance of strategic complementarities in agents' payoff functions as a basis for macroeconomic coordination failures. Strategic complementarities arise when the optimal strategy of an agent depends positively upon the strategies of the other agents. We first analyze an abstract game and find that multiple equilibria and a multiplier process may arise when strategic complementarities are present. Often these equilibria can be Pareto ranked. We then place additional economic content on the analysis of this game by considering strategic complementarities arising from production functions, matching technologies, and commodity demand functions in a multisector, imperfectly competitive economy.

Suggested Citation

  • Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 441-463.
    • Handle: RePEc:oup:qjecon:v:103:y:1988:i:3:p:441-463.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/1885539
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
    2. Jeremy I. Bulow & John Geanakoplos & Paul D. Klemperer, 1983. "Multimarket Oligopoly," Cowles Foundation Discussion Papers 674, Cowles Foundation for Research in Economics, Yale University.
    3. Jean-Pascal Benassy, 1975. "Neo-Keynesian Disequilibrium Theory in a Monetary Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(4), pages 503-523.
    4. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62(2), pages 143-143.
    5. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    6. Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(1), pages 109-138.
    7. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    8. John Bryant, 1983. "A Simple Rational Expectations Keynes-type Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 525-528.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cooper, Russell & Haltiwanger, John, 1996. "Evidence on Macroeconomic Complementarities," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 78-93, February.
    2. Seonghwan Oh & Michael Waldman, 1989. "Keynesian Coordination Failure and Persistence," UCLA Economics Working Papers 570, UCLA Department of Economics.
    3. Seongwan Oh & Michael Waldman, 1989. "The New Perspective on Keynesian Coordination Failure: Theory and Evidence," UCLA Economics Working Papers 559, UCLA Department of Economics.
    4. Amedeo Panci, 1999. "Multiple equilibria: coordination failure and endogenous cycle," Working Papers in Public Economics 30, Department of Economics and Law, Sapienza University of Roma.
    5. Julien, Ludovic A., 2003. "Chômage d’équilibre, équilibres multiples et défauts de coordination," L'Actualité Economique, Société Canadienne de Science Economique, vol. 79(4), pages 523-562, Décembre.
    6. Oddvar M. Kaarbøe & Alexander F. Tieman, 0000. "Equilibrium Selection in Games with Macroeconomic Complementarities," Tinbergen Institute Discussion Papers 99-096/1, Tinbergen Institute.
    7. Thierry Laurent & Hélène Zajdela, 1999. "Emploi, salaire et coordination des activités," Cahiers d'Économie Politique, Programme National Persée, vol. 34(1), pages 67-100.
    8. Russell Cooper & John C. Haltiwanger, 1989. "Macroeconomic Implications of Production Bunching," NBER Working Papers 2976, National Bureau of Economic Research, Inc.
    9. Patrick Artus, 1993. "Défauts de coordination des activités. Principes et exemples," Revue Économique, Programme National Persée, vol. 44(3), pages 551-568.
    10. Fagnart, Jean-Francois & Pierrard, O. & Sneessens, Henri R., 2007. "Microeconomic uncertainty and macroeconomic indeterminacy," European Economic Review, Elsevier, vol. 51(6), pages 1564-1588, August.
    11. Ernst Fehr & Jean-Robert Tyran, 2008. "Limited Rationality and Strategic Interaction: The Impact of the Strategic Environment on Nominal Inertia," Econometrica, Econometric Society, vol. 76(2), pages 353-394, March.
    12. Shleifer, Andrei & Vishny, Robert W, 1988. "The Efficiency of Investment in the Presence of Aggregate Demand Spillovers," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1221-1231, December.
    13. Russell Cooper, 1986. "Optimal Labor Contracts, Imperfect Competition and Underemployment Equilibria: A Framework for Analysis," NBER Working Papers 2060, National Bureau of Economic Research, Inc.
    14. Olivier SCAILLET, 2001. "Density Estimation Using Inverse and Reciprocal Inverse Guassian Kernels," LIDAM Discussion Papers IRES 2001017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Julien, Ludovic A., 2011. "Unemployment equilibrium and economic policy in mixed markets," Economic Modelling, Elsevier, vol. 28(4), pages 1931-1940, July.
    16. Kiminori Matsuyama, 1993. "Modelling Complementarity in Monopolistic Competition," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 11(1), pages 87-108, July.
    17. Takeo Hori & Koichi Futagami, 2019. "A Non‐unitary Discount Rate Model," Economica, London School of Economics and Political Science, vol. 86(341), pages 139-165, January.
    18. De Vroey Michel & Duarte Pedro Garcia, 2013. "In search of lost time: the neoclassical synthesis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 965-995, January.
    19. Robertas Zubrickas, 2020. "Contingent wage subsidy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 1105-1119, August.
    20. Antonio Cabrales & Rosemarie Nagel & Roc Armenter, 2007. "Equilibrium selection through incomplete information in coordination games: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 221-234, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:qjecon:v:103:y:1988:i:3:p:441-463.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/qje .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.