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How productive is optimism? the Impact of ambiguity on the "big push"

Author

Listed:
  • David Kelsey

    (University of Exeter)

  • Wei Pang

    (Kingston University)

Abstract

The paper finds that sufficient ambiguity leads to the uniqueness of equilibrium in macroeconomic coordination games. The results have a Keynesian flavour: sufficient optimism gives rise to a Pareto-optimal equilibrium; and sufficient pessimism results in a Pareto-inferior equilibrium. This analysis is applied to a "Big Push" model from the economic growth literature.

Suggested Citation

  • David Kelsey & Wei Pang, 2010. "How productive is optimism? the Impact of ambiguity on the "big push"," Economics Bulletin, AccessEcon, vol. 30(1), pages 855-865.
    • Handle: RePEc:ebl:ecbull:eb-10-00074
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Ambiguity; Strategic Complementary; Coordination Games; Optimism; Big Push.;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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