Authors
Alexander L Wolman, A Andrew John
Publication date
1999/1/5
Description
The analysis in Ball and Romer [1991] suggests that models with fixed costs of changing price may be rife with multiple equilibria; in their static model price adjustment is always characterized by strategic complementarity, a necessary condition for multiplicity. We extend Ball and Romer's analysis to a dynamic setting. In steady states of the dynamic model, we find only weak complementary and no evidence of multiplicity, although nonexistence of symmetric steady state with pure strategies does arise in a small number of cases.
Scholar articles