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Tinbergen and Theil Meet Nash: Controllability in Policy Games

Author

Listed:
  • Giovanni Di Bartolomeo

    (University of Rome I)

  • Nicola Acocella

    (University of Rome I)

Abstract

This paper generalizes the classical theory of economic policy to a static LQ-strategic context between n players. We show how this generalized version of controllability can profitably be used to deal with policy ineffectiveness issues and Nash equilibrium existence.

Suggested Citation

  • Giovanni Di Bartolomeo & Nicola Acocella, 2005. "Tinbergen and Theil Meet Nash: Controllability in Policy Games," Working Papers 2005.132, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.132
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    References listed on IDEAS

    as
    1. Nicola Acocella & Giovanni Di Bartolomeo, 2005. "Controllability and non-neutrality of economic policy: The Tinbergen’s approach in a strategic context," Macroeconomics 0504034, EconWPA.
    2. Acocella, Nicola & Di Bartolomeo, Giovanni, 2004. "Non-neutrality of monetary policy in policy games," European Journal of Political Economy, Elsevier, vol. 20(3), pages 695-707, September.
    3. Gylfason, Thorvaldur & Lindbeck, Assar, 1994. "The Interaction of Monetary Policy and Wages," Public Choice, Springer, vol. 79(1-2), pages 33-46, April.
    4. Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 1-26.
    5. Sargent, Thomas J & Wallace, Neil, 1975. ""Rational" Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 241-254, April.
    6. Hughes Hallett, Andrew J, 1989. "Econometrics and the Theory of Economic Policy: The Tinbergen-Theil Contributions 40 Years On," Oxford Economic Papers, Oxford University Press, vol. 41(1), pages 189-214, January.
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    Cited by:

    1. N. Acocella & G. Bartolomeo & Andrew Hallett, 2006. "Controllability in Policy Games: Policy Neutrality and the Theory of Economic Policy Revisited," Computational Economics, Springer;Society for Computational Economics, vol. 28(2), pages 91-112, September.
    2. Acocella, Nicola & Di Bartolomeo, Giovanni & Piacquadio, Paolo G., 2009. "Conflict of interests, (implicit) coalitions and Nash policy games," Economics Letters, Elsevier, vol. 105(3), pages 303-305, December.
    3. Nicola Acocella & Giovanni Di Bartolomeo, 2005. "Non-neutrality of economic policy: An application of the Tinbergen-Theil’s approach to a strategic context," Macroeconomics 0504035, EconWPA, revised 26 Apr 2005.
    4. Acocella, Nicola & Di Bartolomeo, Giovanni & Hughes Hallett, Andrew, 2008. "When Can Central Banks Anchor Expectations? Policy communication and controllability," CEPR Discussion Papers 7078, C.E.P.R. Discussion Papers.
    5. Huiping Yuan & Stephen M. Miller & Langnan Chen, 2011. "The Optimality And Controllability Of Monetary Policy Through Delegation With Consistent Targets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(1), pages 82-106, February.
    6. Di Bartolomeo, Giovanni & Hughes Hallett, Andrew & Acocella, Nicola, 2011. "Tinbergen controllability and n-player LQ-games," Economics Letters, Elsevier, vol. 113(1), pages 32-34, October.
    7. Nicola Acocella & Giovanni Di Bartolomeo, 2010. "Conflict of interest and coordination in public good provision," Politica economica, Società editrice il Mulino, issue 3, pages 389-408.
    8. Acocella Nicola & Di Bartolomeo Giovanni, 2007. "Towards a new theory of economic policy: Continuity and innovation," wp.comunite 0020, Department of Communication, University of Teramo.
    9. Huiping Yuan & Stephen M. Miller & Langnan Chen, 2011. "The Optimality And Controllability Of Monetary Policy Through Delegation With Consistent Targets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(1), pages 82-106, February.
    10. Pauline Barrieu & Sinclair Desgagn�, 2009. "Economic policy when models disagree," GRI Working Papers 4, Grantham Research Institute on Climate Change and the Environment.
    11. Huiping Yuan & Stephen M. Miller, 2013. "Target Controllability and Time Consistency: Complement to the Tinbergen Rule," Working papers 2013-35, University of Connecticut, Department of Economics.
    12. Nicola acocella & Giovanni Di Bartolomeo & Andrew Hughes Hallett, "undated". "The theory of economic policy: from a theory of control to a theory of conflict (resolutions)," Working Papers 91/11, Sapienza University of Rome, Metodi e modelli per l'economia, il territorio e la finanza MEMOTEF.
    13. Di Bartolomeo Giovanni & Hughes Hallett Andrew & Acocella Nicola, 2013. "When Can Policy Makers Anchor Expectations? Dynamic controllability and the limits to time inconsistency," wp.comunite 0104, Department of Communication, University of Teramo.
    14. Pauline Barrieu & Bernard Sinclair-Desgagné, 2009. "Economic Policy when Models Disagree," CIRANO Working Papers 2009s-03, CIRANO.
    15. Acocella, Nicola & Di Bartolomeo, Giovanni, 2008. "The Emerging New Theory of Economic Policy," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 61(2-3), pages 135-150.
    16. Hallett, Andrew Hughes & Acocella, Nicola & Di Bartolomeo, Giovanni, 2010. "Policy games, policy neutrality and Tinbergen controllability under rational expectations," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 55-67, March.
    17. Hughes Hallett Andrew & Acocella Nicola & Di Bartolomeo Giovanni, 2012. "Expectations Dynamics: Policy, Announcements and Limits to Dynamic Inconsistency," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(2), pages 1-25, April.
    18. Huiping Yuan & Stephen M. Miller, 2011. "The Optimality and Controllability of Discretionary Monetary Policy," Working papers 2011-17, University of Connecticut, Department of Economics.

    More about this item

    Keywords

    Policy games; policy ineffectiveness; static controllability; Nash equilibrium existence;

    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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