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Who matters in dynamic coordination problems?

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  • Guimaraes, Bernardo
  • Jardanovski, Gabriel

Abstract

This paper studies a dynamic coordination model with timing frictions and heterogeneity in several dimensions. Each agent might a ect and be a ected by others in di erent ways, and the frequency of their decisions might di er. There is a unique equilibrium in the model. At times, the economy might be stuck in an ine cient low-output equilibrium, and subsidies can improve welfare. The optimal subsidy does not depend on each type's timing frictions: at each point in time, the planner should simply compensate each agent for its externality on others at that particular moment.

Suggested Citation

  • Guimaraes, Bernardo & Jardanovski, Gabriel, 2021. "Who matters in dynamic coordination problems?," Textos para discussão 543, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    • Handle: RePEc:fgv:eesptd:543
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    References listed on IDEAS

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