Frictional Coordination
The notion that business cycles are driven by fluctuations in aggregate demand is subtle. I first review some of the conceptual and empirical challenges faced when trying to accommodate this notion in micro-founded, general-equilibrium models. I next review my own research, which sheds new light on...
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| Other Authors: | |
| Format: | Article |
| Language: | English |
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Oxford University Press (OUP)
2021
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| Online Access: | https://hdl.handle.net/1721.1/135819 |
| _version_ | 1811082113684865024 |
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| author | Angeletos, George-Marios |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Angeletos, George-Marios |
| author_sort | Angeletos, George-Marios |
| collection | MIT |
| description | The notion that business cycles are driven by fluctuations in aggregate demand is subtle. I first review some of the conceptual and empirical challenges faced when trying to accommodate this notion in micro-founded, general-equilibrium models. I next review my own research, which sheds new light on the observed business cycles by accommodating frictional coordination in the form of higher-order uncertainty. This makes room for forces akin to animal spirits even when the equilibrium is unique. It allows demand shocks to generate realistic business cycles even when nominal rigidity is absent or undone by appropriate monetary policy. It modifies the general-equilibrium predictions of workhorse macroeconomic models in manners that seem both conceptually appealing and empirically relevant. And it offers new guidance to policy. |
| first_indexed | 2024-09-23T11:57:47Z |
| format | Article |
| id | mit-1721.1/135819 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T11:57:47Z |
| publishDate | 2021 |
| publisher | Oxford University Press (OUP) |
| record_format | dspace |
| spelling | mit-1721.1/1358192023-09-15T19:27:17Z Frictional Coordination Angeletos, George-Marios Massachusetts Institute of Technology. Department of Economics The notion that business cycles are driven by fluctuations in aggregate demand is subtle. I first review some of the conceptual and empirical challenges faced when trying to accommodate this notion in micro-founded, general-equilibrium models. I next review my own research, which sheds new light on the observed business cycles by accommodating frictional coordination in the form of higher-order uncertainty. This makes room for forces akin to animal spirits even when the equilibrium is unique. It allows demand shocks to generate realistic business cycles even when nominal rigidity is absent or undone by appropriate monetary policy. It modifies the general-equilibrium predictions of workhorse macroeconomic models in manners that seem both conceptually appealing and empirically relevant. And it offers new guidance to policy. 2021-10-27T20:29:27Z 2021-10-27T20:29:27Z 2018 2019-10-18T17:38:28Z Article http://purl.org/eprint/type/JournalArticle https://hdl.handle.net/1721.1/135819 en 10.1093/JEEA/JVY019 Journal of the European Economic Association Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Oxford University Press (OUP) NBER |
| spellingShingle | Angeletos, George-Marios Frictional Coordination |
| title | Frictional Coordination |
| title_full | Frictional Coordination |
| title_fullStr | Frictional Coordination |
| title_full_unstemmed | Frictional Coordination |
| title_short | Frictional Coordination |
| title_sort | frictional coordination |
| url | https://hdl.handle.net/1721.1/135819 |
| work_keys_str_mv | AT angeletosgeorgemarios frictionalcoordination |