Robust comparative statics for non-monotone shocks in large aggregative games

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2020-03-01
Date
2018
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Source Title
Journal of Economic Theory
Print ISSN
0022-0531
Electronic ISSN
1095-7235
Publisher
Academic Press
Volume
174
Issue
Pages
288 - 299
Language
English
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Abstract

A policy change that involves a redistribution of income or wealth is typically controversial, affecting some people positively but others negatively. In this paper we extend the “robust comparative statics” result for large aggregative games established by Acemoglu and Jensen (2010) to possibly controversial policy changes. In particular, we show that both the smallest and the largest equilibrium values of an aggregate variable increase in response to a policy change to which individuals' reactions may be mixed but the overall aggregate response is positive. We provide sufficient conditions for such a policy change in terms of distributional changes in parameters.

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