NCR1. "The Coordination Problem and Equilibrium Theories of Recessions," joint with R. E. Manuelli, American Economic Review , 1992, Vol. 82, pages 451-471.
NCR2. "Labor Contracts in a Model of Imperfect Competition," joint with V. V. Chari and R. E. Manuelli, American Economic Review , 1989, pages 358-364.
In these two papers, we study non-cooperative models of recessions.
Can a detailed, game theoretic, general equilibrium, model of the determination of output and employment deliver the qualitative properties of a recession?
In NCR1, we show that these models do deliver higher relative prices than what would be expected in a Walrasian equilibrium (along with lower relative wages and lower output), but that there is no 'involuntary unemployment.' That is, workers are on their Walrasian labor supply curves at the equilibrium wages.
In NCR2, we show that there can be involuntary unemployment in this class of models if there is private information/contracting and the technology is non-convex.