Fiscal- Monetary Policy and Debt Management: a Two Stage Dynamic Analysis
This paper studies the interaction between two autonomous policymakers, the central bank and the government, in managing public debt as the result of a two-stage game. In the first stage the institutional regime is established. This determines the equilibrium solution to be applied in the second stage, in which a differential game is played between the two policymakers. It is shown that, if the policymakers can communicate before the game is played, (multiple-equilibrium) coordination problems can be solved by using the concept of correlated equilibrium. Unlike Nash equilibrium, which only allows for individualistic and independent behaviour, a correlated equilibrium allows for the playersâ€™ behaviour to be coordinated and correlated.
|Date of creation:||Jun 2004|
|Contact details of provider:|| Postal: Via Del Castro Laurenziano 9, 00161 Roma|
Phone: +39 6 49766353
Fax: +39 6 4462040
Web page: http://www.dipecodir.it/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sergiu Hart & Andreu Mas-Colell, 1996.
"A simple adaptive procedure leading to correlated equilibrium,"
Economics Working Papers
200, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1996.
- Sergiu Hart & Andreu Mas-Colell, 2000. "A Simple Adaptive Procedure Leading to Correlated Equilibrium," Econometrica, Econometric Society, vol. 68(5), pages 1127-1150, September.
- S. Hart & A. Mas-Collel, 2010. "A Simple Adaptive Procedure Leading to Correlated Equilibrium," Levine's Working Paper Archive 572, David K. Levine.
- Sergiu Hart & Andreu Mas-Colell, 1997. "A Simple Adaptive Procedure Leading to Correlated Equilibrium," Game Theory and Information 9703006, EconWPA, revised 24 Mar 1997.
- Russell Cooper & Hubert Kempf, 2000.
"Designing Stabilization Policy in a Monetary Union,"
Econometric Society World Congress 2000 Contributed Papers
0529, Econometric Society.
- Russell W. Cooper & Hubert Kempf, 2000. "Designing Stabilization Policy in a Monetary Union," NBER Working Papers 7607, National Bureau of Economic Research, Inc.
- Russell Cooper & Hubert Kempf, 2000. "Designing Stabilization Policy in a Monetary Union," Boston University - Institute for Economic Development 99, Boston University, Institute for Economic Development.
- Russell W. Cooper & Hubert Kempf, 2000. "Designing stabilization policy in a monetary union," Working Paper 0001, Federal Reserve Bank of Cleveland.
- Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, December.
- Jensen, Henrik, 1994. "Loss of monetary discretion in a simple dynamic policy game," Journal of Economic Dynamics and Control, Elsevier, vol. 18(3-4), pages 763-779.
- Xavier Debrun, 2000. "Fiscal Rules in a Monetary Union: A Short-Run Analysis," Open Economies Review, Springer, vol. 11(4), pages 323-358, October.
- Ecchia, Giulio & Mariotti, Marco, 1998. "Coalition formation in international environmental agreements and the role of institutions," European Economic Review, Elsevier, vol. 42(3-5), pages 573-582, May.
- Bovenberg, A.L. & van Aarle, B. & Raith, M., 1997.
"Is there a tragedy of a common Central Bank? A dynamic analysis,"
Other publications TiSEM
e5ccc34e-07da-4d65-baca-b, Tilburg University, School of Economics and Management.
- van Aarle, Bas & Lans Bovenberg, A. & Raith, Matthias G., 1997. "Is there a tragedy of a common central bank? A dynamic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 21(2-3), pages 417-447.
- Avinash Dixit & Luisa Lambertini, 2003.
"Interactions of Commitment and Discretion in Monetary and Fiscal Policies,"
Boston College Working Papers in Economics
575, Boston College Department of Economics.
- Avinash Dixit & Luisa Lambertini, 2003. "Interactions of Commitment and Discretion in Monetary and Fiscal Policies," American Economic Review, American Economic Association, vol. 93(5), pages 1522-1542, December.
- Sergiu Hart & Andreu Mas-Colell, 1999.
"A general class of adaptative strategies,"
Economics Working Papers
373, Department of Economics and Business, Universitat Pompeu Fabra.
- Debora Di Gioacchino & Sergio Ginebri & Laura Sabani, 2004. "Political support for anti-inflationary monetary policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 187-200.
- Reinhard Neck & Engelbert Dockner, 1995. "Commitment and coordination in a dynamic game model of international economic policy-making," Open Economies Review, Springer, vol. 6(1), pages 5-28, January.
- Hayo, Bernd & Hefeker, Carsten, 2002. "Reconsidering central bank independence," European Journal of Political Economy, Elsevier, vol. 18(4), pages 653-674, November.
When requesting a correction, please mention this item's handle: RePEc:sap:wpaper:wp74. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luisa Giuriato)
If references are entirely missing, you can add them using this form.