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Non-neutrality of economic policy: An application of the Tinbergen-Theil's approach to a strategic context

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Author Info
Nicola Acocella
Giovanni Di Bartolomeo

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Abstract

Issues of policy effectiveness and neutrality are widespread in the economic literature. They have been increasingly raised in specific contexts within the class of LQ (linear-quadratic) policy games in the last 20 years, notably with reference to monetary policy. The more general conditions ensuring nonneutrality in a strategic environment remain however to be inquired. We fill this gap by applying the classical theory of economic policy to a strategic context. This is also useful to highlight some existence conditions for policy game solutions. We restrict ourselves to the common LQ-games in a static perfect information framework, but our simple logic can be extended to other more general situations.

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File URL: http://dep.eco.uniroma1.it/docs/working_papers/Wp82.pdf
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File Function: First version, 2005
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Publisher Info
Paper provided by Sapienza University of Rome, Department of Public Economics in its series Working Papers with number 82.

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Length: 61 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:sap:wpaper:82

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Related research
Keywords: LQ-policy games; policy ineffectiveness; controllability.;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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    Other versions:
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