Coordination Failure, Multiple Equilibria and Economic Institutions
Bibliographic Data
| ID | 9726313 |
|---|---|
| Authors | Henning Bohn, Gary Gorton (0000-0002-5317-3752), Gary B Gorton |
| Year | 1993 |
| Volume | 60 |
| Issue | 239 |
| Pages | 257 |
| Publication date | 1993-08-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2554851 |
| OpenAlex | W2029765120 |
| Language | EN |
| Citations received | 1 |
| References cited | 8 |
Models of coordination failure have equilibria that are not first-best because of externalities. Usually these models display multiple equilibria. We provide an example of how the existence of some economic institutions and government policies can be explained as mechanisms for internalizing externalities and selecting the best equilibrium in these settings. The example we analyze is that of nominal wage and debt contracts. Nominal contracts can improve on the underinvestment equilibrium by implementing Pareto-improving transfers between agents. If there are multiple underinvestment equilibria, then monetary policy can have real effects because the monetary authority can choose a money supply rule to coordinate beliefs and, thereby, select the best equilibrium. Copyright 1993 by The London School of Economics and Political Science
Coordination failure · Coordination game · Debt · Economics · Equilibrium selection · Externality · Game theory · Macroeconomics · Microeconomics · Multi-objective optimization · Pareto efficiency · Pareto optimal · Pareto principle · Repeated game · Wage · Banking stability, regulation, efficiency · Computer Science · Economic theories and models · Economic Theory and Policy
Coordinating Coordination Failures in Keynesian Models
Wage Indexing Rules and the Behavior of the Economy
Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule
Aggregate Demand Management in Search Equilibrium
Implicit Contracts and Underemployment Equilibria
Bank Runs, Deposit Insurance, and Liquidity
Increasing Returns and the Foundations of Unemployment Theory
A Monetary History of the United States, 1867-1960
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,13 |
| Citation span | 2018 - 2018 (1) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 1 |