Chapter

Coordination and Externalities in Macroeconomics

Fabio-Cesare Bagliano and Giuseppe Bertola

in Models for Dynamic Macroeconomics

Published in print February 2004 | ISBN: 9780199266821
Published online January 2005 | e-ISBN: 9780191601606 | DOI: http://dx.doi.org/10.1093/0199266824.003.0005
Coordination and Externalities in Macroeconomics

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Focusses on the macroeconomic effects of strategic interactions among optimizing agents in several contexts. Trading externalities are introduced in a non‐monetary economy and the possibility of multiple equilibria is discussed. A search model of money is then presented, which formalizes the use of money as a medium of exchange. Finally, a model of the labour market characterized by a process of search on the part of workers and firms is studied, and the dynamics of frictional unemployment, vacancies, and wages are discussed.

Keywords: frictional unemployment; money as a medium of exchange; multiple equilibria; search models; strategic interactions

Chapter.  22148 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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