Aggregate pattern of time-dependent adjustment rules, II: strategic complementarity and endogenous nonsynchronization

This paper provides an explanation for an important institutional feature of staggered time-dependent adjustment rules assumed in a number of macroeconomic models. It identifies strategic complementarity as the crucial factor leading to nonsynchronized decisions in a game-theoretic framework. The paper first shows that nonsynchronization is the equilibrium outcome in an infinite-horizon game in which strategic complementarity is present, whether the players choose predetermined or fixed actions. By pursuing the interpretation of a nonsynchronized-move dynamic game as a series of games with symmetric Stackelberg leadership, it is further suggested that the relationship between strategic complementarity and the benefit to the Stackelberg follower provides the insight to the game-theoretic explanation of nonsynchronization. The results of this paper reveal a link between strategic complementarity and nonsynchronization—two important macroeconomic features. Journal of Economic Literature Classification Numbers: E30, L16.