The goal of this book is to provide a synthesis of research on the topic of complementarities in macroeconomics. Its primary goal is to isolate the various sources of complementarity and then to explore their implications for the behavior of macroeconomies. The success of this approach is seen through the numerous theoretical and empirical applications of the basic structure inherent in model economies built upon the macroeconomic complementarities structure.

As this is principally a book about applications in macroeconomics, it has been necessary to leave aside a number of topics that relate to the implications of complementarities for other branches of economics, such as industrial organization. Still, the reader interested in applications outside macroeconomics ideally will find the more general discussion of models of complementarities as well as the presentation of experimental evidence of some value.

The first two chapters as well as the next section of this Preface focus on general issues arising in models of complementarities, thus providing a framework for the more applied analysis that will follow. In particular, the first two chapters discuss experimental evidence on coordination games and theories of selection and put forth a general model of macroeconomic complementarities.

The remaining chapters explore applications of the general structure by investigating particular channels of interactions across agents. This includes the study of economies in which (i) externalities are present in the technology of the individual agent, (ii) markets are imperfectly competitive, (iii) agents come together through a search process and (iv) information is imperfect. As we shall see, all of these deviations from the standard general equilibrium model of Arrow and Debreu can give rise to macroeconomic complementarities.