Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/85713
Authors: 
Kaarbøe, Oddvar M.
Tieman, Alexander F.
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper 99-096/1
Abstract: 
We apply the stochastic evolutionary approach of equilibrium selection tomacroeconomic models in which a complementarity at the macro level ispresent. These models often exhibit multiple Pareto-ranked Nash equilibria,and the best response-correspondence of an individual increases with ameasure of the aggregate state of the economy. Our main theoretical resultshows how the equilibrium that is singled out by the evolutionary dynamicsis directly related to the underlying externality that creates themultiplicity problem in the underlying macroeconomic stage game. We alsoprovide clarifying examples from the macroeconomic literature.
JEL: 
C63
C72
C73
E19
L16
Document Type: 
Working Paper

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