Incorporating rigidity and commitment in the timing structure of macroeconomic games

Kód výsledku v 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>

Výsledek na webu

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DOI - Digital Object Identifier

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Jazyk výsledku

angličtina

Název v původním jazyce

Incorporating rigidity and commitment in the timing structure of macroeconomic games

Popis výsledku v původním jazyce

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

Název v anglickém jazyce

Incorporating rigidity and commitment in the timing structure of macroeconomic games

Popis výsledku anglicky

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

Druh

J_x - Nezařazeno - Článek v odborném periodiku (Jimp, Jsc a Jost)

CEP obor

AH - Ekonomie

OECD FORD obor

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Projekt

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Návaznosti

Z - Vyzkumny zamer (s odkazem do CEZ)

Rok uplatnění

2010

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Economic Modelling

ISSN

0264-9993

e-ISSN

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Svazek periodika

207

Číslo periodika v rámci svazku

3

Stát vydavatele periodika

NL - Nizozemsko

Počet stran výsledku

15

Strana od-do

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Kód UT WoS článku

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EID výsledku v databázi Scopus

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