Was the Great Depression the outcome of a massive coordination failure? Or was it a unique equilibrium response to adverse shocks? More generally, do aggregates fluctuate partly because agents occasionally settle on inferior, low-level equilibria? These questions lie at the heart of the current...

This paper investigates the possibility of sunspots equilibria and endogenous cycles in an overlapping generations model with strategic interactions. We consider an economy with imperfectly competitive product markets. There is a participation decision on the part of prospective firms and a...

These lectures comment upon recent theoretical models of endogenous fluctuations in economic dynamics, including both the literature on nonlinear deterministic cycles arid the literature on "sunspot equilibria". Two important themes include (1) reasons to be interested in models of purely...

An equilibrium model of fluctuations has two components: an elastic labor supply schedule and a source of shifts of the labor demand schedule. In the real business cycle model, shifts of labor demand follow from vibrations in the production function. In the model of this paper, shifts of labor...

Macroeconomic dynamics are shaped by how individual incentives to spend and accumulate interact with the decisions of others. The goal of this paper is to identify--within a simple large-game-theoretic structure--which types of agent interactions favor which types of dynamic equilibrium...

This study explores empirically the price dynamics within two distinct market institutions - a double oral auction, which resembles modern asset markets, and a bilateral exchange market, which represents markets that have existed for centuries. To provide a theoretical basis to our...

We complete the study of comparative statics initiated in Caplin and Leahy [2010], which introduced a new mathematical apparatus for understanding NTU allocation markets, as such covering the housing market and other markets for large indivisible goods. We introduce homotopy methods to...

In recent years, cases in which state governments chose to override federal environmental regulation with tighter regulations of their own have become increasingly common, even for pollutants that have substantial spillovers across states. This paper argues that this change arose at least in...

The interaction between offenders and potential victims has so far received relatively little attention in the literature on the economics of crime. The main objective of this paper is twofold: to extend the "market for offenses model" to deal with both "product" and "factor" markets, and to...

Inventories and price changes are correlated. The inverse relation is most obvious in housing where inventories build in low demand markets and shrink in high demand markets. This is a puzzle. Symmetry of information among buyers and sellers would seem to imply that sellers would change their...