Who matters in dynamic coordination problems?

Bernardo Guimaraes and Gabriel Jardanovski

No 543, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: This paper studies a dynamic coordination model with timing frictions and heterogeneity in several dimensions. Each agent might a ect and be a ected by others in di erent ways, and the frequency of their decisions might di er. There is a unique equilibrium in the model. At times, the economy might be stuck in an ine cient low-output equilibrium, and subsidies can improve welfare. The optimal subsidy does not depend on each type's timing frictions: at each point in time, the planner should simply compensate each agent for its externality on others at that particular moment.

Date: 2021-06
New Economics Papers: this item is included in nep-mic and nep-ore
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Journal Article: Who matters in dynamic coordination problems? (2022)
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