Coordinating Coordination Failures in Keynesian Models

Russell Cooper and Andrew John

No 745R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This paper focuses on the importance of strategic complementarity in agents' payoff functions as a basis for macroeconomic coordination failures. We first analyze an abstract game and find that inefficient equilibria and a multiplier process may arise in the presence of strategic complementarities (essentially positively sloped reaction curves). We then place additional economic content on complementarities arising from production functions, matching technologies and commodity demand functions in a multi-sector economy.

Keywords: Coordination; multipliers; strategic complementarity; Keynesian (search for similar items in EconPapers)
Pages: 37 pages
Date: 1985-04, Revised 1985-07
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Citations: View citations in EconPapers (10)

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Journal Article: Coordinating Coordination Failures in Keynesian Models (1988)
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