This paper proposes a simple macroeconomic model with staggered investment decisions. The expected return from investing depends on demand expectations, which are pinned down by fundamentals and history. Owing to an aggregate demand externality, investment subsidies can improve welfare in this...

Market participants' risk attitudes, wealth and portfolio composition influence their positions in a pegged foreign currency and, therefore, may have important effects on the sustainability of currency pegs. We analyze such effects in a global game model of currency crises with continuous action...

We analyze the effect of risk aversion, wealth and portfolios on the behavior of investors in a global game model of currency crises with continuous action choices. The model generates a rich set of striking theoretical predictions. For example, risk aversion makes currency crises significantly...

Fundamental models of money, while explicit about the frictions that render money essential, are silent on how agents actually coordinate in its use. This paper studies this coordination problem, providing an endogenous map between the primitives of the environment and the beliefs on the...

This paper studies how constraints on the timing of actions affect equilibrium in intertemporal coordination problems. The model exhibits a unique symmetric equilibrium in cut-o¤ strategies. The risk-dominant action of the underlying one-shot game is selected when the option to delay effort is...

This paper studies equilibrium selection in intertemporal coordination problems with delay options. The risk-dominant action of the underlying one-shot game is selected when frictions are arbitrarily small. Larger frictions introduce real option effects in the model and inhibit coordination.

In some coordination problems, an agent's payoff depends on what other agents will do in the future. This paper studies how constraints on the timing of actions affect equilbrium in those problems. While the possibility of waiting longer for others' actions helps agents to coordinate in the good...

A striking fact about prices is the prevalence of "sales": large temporary price cuts followed by prices returning exactly to their former levels. This paper builds a macroeconomic model with a rationale for sales based on firms facing consumers with different price sensitivities. Even if firms...

In order to understand inefficient institutions, one needs to understand what might cause the breakdown of a political version of the Coase Theorem. This paper considers an environment populated by ex-ante identical agents and develops a model of power and distribution where institutions (the...