Short-Run Expectational Coordination: Fixed Versus Flexible Wages

Roger Guesnerie ()

The Quarterly Journal of Economics, 2001, vol. 116, issue 3, 1115-1147

Abstract: This paper considers a simple "three-goods" model and focuses attention on the expectational stability of its equilibria. The setting allows us to describe stylized general equilibrium macro interactions: firms hire workers and then sell production to buyers whose purchasing power depends on the firms' previous decisions. We assess expectational stability from an "eductive" learning procedure that reflects basic rationality considerations. From our viewpoint on coordination, we compare the merits of fixed wages versus flexible wages. Although in both cases the same factors—supply and demand elasticities, marginal propensity to save—are effective, expectational coordination is often more successful with flexible wages.

Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1162/00335530152466322 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: On Short - Run Expectational Coordination: Fixed versus Flexible wages (2000)
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:oup:qjecon:v:116:y:2001:i:3:p:1115-1147.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().