SEMINAR SERIES
Macroeconomics Seminar (Joint with Macroeconomics and Economic Systems Workshop, KIER)
Kozo Ueda（Professor , School of Political Science and Economics Waseda University）
- Date&Time:
- 2025.11.20 (Thu) 15:00-16:30
- Venue:
- Refresh Room on 8F, Faculty of Law and Faculty of Economics, East Bldg., Yoshida Campus, Kyoto University
- Language:
- English
- Contact:
- Kohei Iwasaki
"Strategic Complementarity and Slow Inflation Convergence: Evidence from Dynamic Beauty Contest Experiments"
Abstract:
This study investigates why inflation converges only slowly to its target by combining laboratory experiments with structural estimation. We create a laboratory environment in which subjects act as firms and set prices under Calvo-type stickiness, where profits are determined as a weighted average of competitors’ prices and an exogenously given aggregate price. The experimental results show that both higher aggregate inflation and stronger strategic complementarity hinder convergence to the theoretical equilibrium under rational expectations. Using Bayesian MCMC estimation, we systematically compare subjects’ behavior with rational-expectations predictions, allowing for small deviations motivated by bounded rationality. The results reveal that subjects overestimate strategic complementarity, which contributes to delayed inflation convergence.