Nelson Lind from Emory University will present "Dynamic Coordination Under Rational Expectations"

Abstract: Many macroeconomic questions relate to complementarities that generate path dependence or multiple steady states. I provide a characterization of rational expectations equilibria in economies with global saddle dynamics — a condition satisfied in common growth models with poverty traps, economic geography models with agglomeration externalities, and models of urban sorting and segregation. The support of all rational expectations equilibria corresponds to the fixed point of a contractive rationalizability operator. After computing this unique support set, counterfactual analysis follows by sampling equilibrium paths subject to the intertemporal consistency constraints implied by rational expectations. Despite multiplicity, these trajectories are structured. It is not the case that anything goes.