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Financial Policies and Dynamic Game Simulation in Poland and Hungary

Author

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  • Yoshino, Hisao

Abstract

Recently, steady economic growth rates have been kept in Poland and Hungary. Moneysupplies are growing rather rapidly in these economies. In large, exchange rates have trends ofdepreciation. Then, exports and prices show the steady growth rates. It can be thought that percapita GDPs are in the same level and development stages are similar in these two countries. It isassumed that these two economies have the same export market and export goods are competing init. If one country has an expansion of monetary policy, price increase and interest rate decrease.Then, exchange rate decrease. Exports and GDP will increase through this phenomenon. At thesame time, this expanded monetary policy affects another country through the trade. This mutualrelationship between two countries can be expressed by the Nash-equilibrium in the Game theory.In this paper, macro-econometric models of Polish and Hungarian economies are built and theNash- equilibrium is introduced into them.

Suggested Citation

  • Yoshino, Hisao, 2009. "Financial Policies and Dynamic Game Simulation in Poland and Hungary," IDE Discussion Papers 187, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper187
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=37980&item_no=1&attribute_id=22&file_no=1
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    More about this item

    Keywords

    East Europe; Poland; Hungary; Monetary policy; Nash-equilibrium; Game theory; Macro-econometric model; Trade; Simulation; Reaction function; Money supply; Central bank;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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