tag:blogger.com,1999:blog-2499715909956774229.post391290128140006199..comments2024-03-09T02:22:57.289-08:00Comments on Stephen Williamson: New Monetarist Economics: What Happened to Coordination Failure Models?Stephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2499715909956774229.post-51659160495361717802010-08-28T18:19:17.873-07:002010-08-28T18:19:17.873-07:00John Duffy and I published something in the AER fi...John Duffy and I published something in the AER five years ago that was an experiment based on correlated equilibrium. It was not quite a Cooper-John framework because it lacked the super-modularity of Keynesian games. But it was picked up by the New Scientist as a possible explanation for the financial crisis afte the way the Paulson bailout plan was announced. <br /><br />http://www.calpoly.edu/~efisher/Publications.htmlEric Fisherhttp://www.calpoly.edu/~efishernoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-23367349858589938612010-08-27T22:27:45.467-07:002010-08-27T22:27:45.467-07:00Nick,
Virtually the entire General Theory was de...Nick,<br /><br />Virtually the entire <i>General Theory </i> was devoted to the question of "why things might not move on their own." Are you now suggesting that we abandon that enterprise? ;)David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-86976420485025419242010-08-27T21:43:14.899-07:002010-08-27T21:43:14.899-07:00Thanks for the links, David and Josh. Ah, the UWO ...Thanks for the links, David and Josh. Ah, the UWO connections! (Roger, Peter, Preston, as well as Steve, David, and me.)<br /><br />I still keep thinking though, just as Samuelson asked "Have you ever seen an egg standing on end?", how often do you see a ball resting on a perfectly flat surface? It's more usual to invoke friction, to explain why things don't move.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-29948795772924291192010-08-27T21:00:51.231-07:002010-08-27T21:00:51.231-07:00As one of the commenters already mentioned, Roger ...As one of the commenters already mentioned, Roger Farmer is still doing this type of work.<br /><br />Here is his recent JME paper:<br /><br />http://farmer.sscnet.ucla.edu/NewWeb/PdfFiles/FaFiscal-02-11-10-carnegie.pdfJoshhttp://www.everydayecon.comnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-15165476843868272872010-08-27T19:33:43.538-07:002010-08-27T19:33:43.538-07:00Nick,
I think that Howitt and McAfee (1992) is a ...Nick,<br /><br />I think that Howitt and McAfee (1992) is a place you might start. Before you do that though, here is a nice summary by Peter:<br /><br />http://www.econ.brown.edu/fac/Peter_Howitt/publication/Coordination.pdfDavid Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-55049134826882003742010-08-27T19:17:20.452-07:002010-08-27T19:17:20.452-07:00Plus, the labour supply curve is just too inelasti...Plus, the labour supply curve is just too inelastic to make most of them work. Exactly the same problem that RBC theorists face.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-40223671804676340872010-08-27T19:14:01.025-07:002010-08-27T19:14:01.025-07:00Good question.
Speaking only personally, I gave u...Good question.<br /><br />Speaking only personally, I gave up building coordination failure models because the only models I could build were very "fragile". Fragile in the sense that the tiniest change in the assumptions meant very big changes in the conclusions. I needed "knife edge" parameter values to get the desired results. So my models just didn't seem very plausible.<br /><br />But I haven't given up on the idea. Just can't think of any plausible and robust way to make it work.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-12058029740538830102010-08-27T13:05:54.635-07:002010-08-27T13:05:54.635-07:00Farmer's still working on these things, though...Farmer's still working on these things, though based more on his work with Beyer rather than Guo(I'm still working through his "Expectations, Employment and Prices" book. Definitely GE models with Keynesian features though. <br /><br />PSpsummershttps://www.blogger.com/profile/16146930482281058979noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-73978692368434381052010-08-27T13:02:23.199-07:002010-08-27T13:02:23.199-07:00I agree with Tom's explanation, but I disagree...I agree with Tom's explanation, but I disagree with "people's" opinion. Multiple equilibria is the only sensible explanation of keynesian's lack-of-demand explanation of a recession. Why economies between equilibria is another matter, why the government should know how to make people switch (using public investment) is yet another matter, etc... etc... but it is, indeed, a coherent story. <br />-- AMAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-59240395744823152492010-08-27T12:12:37.521-07:002010-08-27T12:12:37.521-07:00Well, people are uncomfortable with multiple equil...Well, people are uncomfortable with multiple equilibrium models unless they also tell a convincing story of why we should happen to be in any particular equilibrium at any particular point in time. This is basically the standard objection to sunspots: it is not at all obvious how expectations would end up coordinated around a particular non-MSV solution.<br /><br />That said, there's plenty of good work still being done with sunspots, e.g. Jaimovich (2007) or Wang and Wen (2007).Tom Holdenhttps://www.blogger.com/profile/12321127116935047622noreply@blogger.com