Dennis, R. and Kirsanova, T. (2018) Equilibrium coordination with discretionary policy making. Economic Journal, 128(609), pp. 710-727. (doi: 10.1111/ecoj.12407)
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Abstract
Discretionary policymakers cannot manage private-sector expectations and cannot coor- dinate the actions of future policymakers. As a consequence, coordination failures can occur and multiple equilibria can arise. In this paper we employ notions of self-enforceability and learnability to motivate and identify equilibria of particular interest in discretionary policy problems exhibiting multiple equilibria. Central among these criteria are whether an equilib- rium is robust to the formation of coalitions, and whether it is learnable by private agents and jointly learnable by private agents and the policymaker. Unless the Pareto-preferred equilibrium is learnable by private agents we find little reason to expect coordination on that equilibrium.
Item Type: | Articles |
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Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Kirsanova, Professor Tatiana and Dennis, Professor Richard |
Authors: | Dennis, R., and Kirsanova, T. |
College/School: | College of Social Sciences > Adam Smith Business School > Economics |
Journal Name: | Economic Journal |
Publisher: | Wiley |
ISSN: | 0013-0133 |
ISSN (Online): | 1468-0297 |
Published Online: | 12 April 2017 |
Copyright Holders: | Copyright © 2016 Royal Economic Society |
First Published: | First published in Economic Journal 128(609):710-727 |
Publisher Policy: | Reproduced in accordance with the copyright policy of the publisher |
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