Dynamic Coordination and the Optimal Stimulus Policies

Dados Bibliográficos

ID9709643
AutoresBernardo Guimaraes (0000-0003-0098-2174, Sao Paulo School of Economics – FGV, autor correspondente), Caio Machado (0000-0002-5545-6270, Pontificia Universidad Católica de Chile)
Ano2018
Volume128
Fascículo615
Páginas2785-2811
Data de publicação2018-11-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Economic Journal (JOURNAL)
Identificadores do periódicoISSN: 0013-0133 • E-ISSN: 1468-0297
EditoraOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12547
OpenAlexW2754011027
IdiomaEN
Citações recebidas1
Referências citadas48

This article studies stimulus policies in a simple macroeconomic model featuring a dynamic coordination problem that arises from demand externalities and fixed costs of investment. In times of low economic activity, firms face low demand and hence have lower incentives for investing, which reinforces their low‐demand expectations. In a benchmark case with no shocks, the economy might get trapped in a low‐output regime and a social planner would be particularly keen to incentivise investment at times of low economic activity. However, this result vanishes once shocks are considered

Demand shock · Economics · Externality · Incentive · Investment (military · Macroeconomics · Microeconomics · Monetary economics · Planner · Social planner · Stimulus (psychology · Economic theories and models · Economic Theory and Institutions · Economic Theory and Policy