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

This paper provides an explanation for an important institutional feature o f staggered time-dependent adjustment rules assumed in a number of macroeco nomic models. It identifies strategic complementarity as the crucial factor leading to non-synchronized decisions in a game-theoretic framework. The p aper first shows that nonsynchronization is the equilibrium outcome in an i nfinite-horizon game in which strategic complementarity is present. whether the players choose predetermined or fixed actions. By pursuing the interpr etation of a nonsynchronized-move dynamic game as a series of games with sy mmetric Stackelberg leadership. it is further suggested that the relationsh ip between strategic complementarity and the benefit to the Stackelberg fol lower provides the insight to the game-theoretic explanation of nonsynchron ization. The results of this paper reveal a link between strategic compleme ntarity and nonsynchronization-two important macroeconomic features. (C) 20 01 Academic Press.