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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 (University of Rome I)
Giovanni Di Bartolomeo (University of Rome I)

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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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Paper provided by EconWPA in its series Macroeconomics with number 0504035.

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Length: 55 pages
Date of creation: 26 Apr 2005
Date of revision: 26 Apr 2005
Handle: RePEc:wpa:wuwpma:0504035

Note: Type of Document - pdf; pages: 55
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Web page: http://129.3.20.41

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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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