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The theory of economic policy: from a theory of control to a theory of conflict (resolutions)

  • Nicola acocella


    (Department of Methods and Models for Economics, Territory and Finance MEMOTEF, Sapienza University of Rome (Italy))

  • Giovanni Di Bartolomeo


    (Department of Economics and Law - Sapienza University of Roma (Italy))

  • Andrew Hughes Hallett


    (School of Public Policy, George Mason University, Arlington, Virginia, Usa)

The theory of economic policy has its roots in the contributions of Tinbergen and Theil, who solved the problem of a policymaker aiming to achieve certain values for his policy targets, or to minimize a loss function defined on those targets, by using the available policy instruments. After Lucas raised the issue that the private sector could react to the policymaker’s decisions the theory developed by Tinbergen and Theil lost its appeal and most policy problems have been discussed in terms of policy games, thus introducing the possibility of conflicts among different players. The new theory of economic policies revisits the Tinbergen and Theil approach, by applying some concepts and tools introduced by them in order to develop a theory of conflicts, able to assert conditions under which policy neutrality, game equilibrium existence, and policy uniqueness or multiplicity appear.

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Paper provided by Sapienza University of Rome, Metodi e modelli per l'economia, il territorio e la finanza MEMOTEF in its series Working Papers with number 91/11.

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Handle: RePEc:rsq:wpaper:7/11
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  1. Acocella Nicola & Di Bartolomeo Giovanni & Piacquadio Paolo Giovanni, 2009. "Conflict of interests, (implicit) coalitions and Nash policy games," wp.comunite 0054, Department of Communication, University of Teramo.
  2. Giovanni Di Bartolomeo & Nicola Acocella, 2005. "Tinbergen and Theil Meet Nash: Controllability in Policy Games," Working Papers 2005.132, Fondazione Eni Enrico Mattei.
  3. Acocella, Nicola & Di Bartolomeo, Giovanni & Hallett, Andrew Hughes, 2007. "Dynamic Controllability With Overlapping Targets: Or Why Target Independence May Not Be Good For You," Macroeconomic Dynamics, Cambridge University Press, vol. 11(02), pages 202-213, April.
  4. 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.
  5. Jordi Galí, 2008. "Introduction to Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework
    [Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Ke
    ," Introductory Chapters, Princeton University Press.
  6. Richard Bellman, 1957. "On a Dynamic Programming Approach to the Caterer Problem--I," Management Science, INFORMS, vol. 3(3), pages 270-278, April.
  7. 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.
  8. Athanasios Orphanides & John C. Williams, 2003. "Robust monetary policy rules with unknown natural rates," Finance and Economics Discussion Series 2003-11, Board of Governors of the Federal Reserve System (U.S.).
  9. 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.
  10. Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2000. "Monetary Institutions, Monopolistic Competition, Unionized Labour Markets And Economic Performance," CEPR Discussion Papers 2407, C.E.P.R. Discussion Papers.
  11. Francesco Lippi, 2003. "Strategic Monetary Policy with Non-Atomistic Wage Setters," Review of Economic Studies, Oxford University Press, vol. 70(4), pages 909-919.
  12. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  13. Acocella, Nicola & Ciccarone, Giuseppe, 1997. " Trade Unions, Nonneutrality and Stagflation," Public Choice, Springer, vol. 91(2), pages 161-78, April.
  14. Christian Merkl, 2008. "Galí J: Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework," Journal of Economics, Springer, vol. 95(2), pages 179-181, November.
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