Working Paper: NBER ID: w8941
Authors: Russell W. Cooper
Abstract: This paper studies quantitative implications of model economies that exhibit multiple equilibria. The goal is to assess two interrelated issues. First, do economies with multiple equilibria have falsifiable predictions? Second, is identification possible in economies that exhibit multiple equilibria? Put differently, are these economies observationally equivalent to economies with unique equilibria? We raise these questions within a general framework and then study a series of examples to determine how the existing literature has addressed them.
Keywords: No keywords provided
JEL Codes: E1; E3; E6; J7; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| observable data (C90) | model validation (C52) |
| multiple equilibria (D50) | identification of parameters (C51) |
| strategic complementarity (D10) | agents' actions (L85) |
| agents' actions (L85) | outcomes observed in data (Y10) |