Endogenous public policy and multiple equilibria

Gerhard Glomm, B. Ravikumar

Research output: Contribution to journalArticlepeer-review

24 Scopus citations


One of the well known roles of public policy in models with indeterminacy is to reduce the set of equilibria. However, agents' expectations regarding future policy may be self fulfilling when public policy is endogenized. We show that a simple overlapping generations economy with public education may yield multiple equilibria. Under a laissez-faire system, our model has a unique equilibrium. Thus, the presence of public policy may generate, rather than eliminate, multiple equilibria.

Original languageEnglish (US)
Pages (from-to)653-662
Number of pages10
JournalEuropean Journal of Political Economy
Issue number4
StatePublished - Apr 1996


  • Multiple equilibria
  • Public policy

ASJC Scopus subject areas

  • Economics and Econometrics
  • Political Science and International Relations


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