EconPapers    
Economics at your fingertips  
 

On Stabilization Policy in Sunspot-Driven Oligopolistic Economies

Rodolphe Dos Santos Ferreira and Frédéric Dufourt

No 1337, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: Economies with oligopolistic markets are prone to inefficient sunspot fluctuations triggered by autonomous changes in firms equilibrium conjectures. We show that a well designed taxation-subsidization scheme can eliminate these fluctuations by coordinating firms in each sector on a single efficient equilibrium. At the macroeconomic level, implementing this stabilization policy leads to significant welfare gains, attributable to a quantitatively dominant "efficient stabilization effect". This effect, while important, is typically ignored in the traditional computations of the welfare costs of aggregate fluctuations (e.g., Lucas, 2003).

Keywords: Business cycles; Stabilization policy; Indeterminacy; Sunspot equilibria; Oligopolistic competition (search for similar items in EconPapers)
JEL-codes: D43 D61 E32 E62 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-06-30, Revised 2013-06-30
New Economics Papers: this item is included in nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2013_-_nr_37.pdf (application/pdf)

Related works:
Working Paper: On stabilization policy in sunspot-driven oligopolistic economies (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1337

Access Statistics for this paper

More papers in AMSE Working Papers from Aix-Marseille School of Economics, France AMU-AMSE - 5-9 Boulevard Maurice Bourdet, CS 50498 - 13205 Marseille Cedex 1. Contact information at EDIRC.
Bibliographic data for series maintained by Gregory Cornu ().

 
Page updated 2025-03-22
Handle: RePEc:aim:wpaimx:1337