Incorporating rigidity and commitment in the timing structure of macroeconomic games

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F49777513%3A23520%2F10%3A00503360" target="_blank" >RIV/49777513:23520/10:00503360 - isvavai.cz</a>
Result on the web
—
DOI - Digital Object Identifier
—

Result language
angličtina
Original language name
Incorporating rigidity and commitment in the timing structure of macroeconomic games
Original language description
This paper proposes a novel framework that generalizes the timing structure of games. Building on alternating move games and models of rational inattention, the players' actions may be rigid, i.e., infrequent. This rigidity in the timing of moves makes the game more dynamic and asynchronous, acting as a commitment mechanism. Therefore, it can enhance cooperation and often eliminate inefficient equilibrium outcomes present in the static (normal form) game. Interestingly, (i) this can happen even in a finite game (possibly as short as two periods) and (ii) without reputation building. Furthermore, (iii) the required degree of commitment may be under some circumstances arbitrarily low and under others infinitely high. Our main example comes from macroeconomics in which various rigidities have played a central role. Investigating the Kydland?Prescott?Barro?Gordon monetary policy game, we derive the necessary and sufficient degree of long-term policy commitment to low inflation under which
Czech name
—
Czech description
—

Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
—

Publication year
2010
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Similar results(10)