IDEAS home Printed from
   My bibliography  Save this paper

A static framework for the Analysis of Policy Optimisation with Interdependent Economies


  • Turner, Paul


The idea of optimal policy design using an explicit loss function was a natural consequence of the development of econometric models of the macroeconomy. Since the economic theory underlying these was, at first the comparative static Keynesian model the techniques used tended to be static also. This approach can be seen in Tinbergen (1956). In addition since most of the early theory of open-economy macroeconomics was within the small open economy framework single controller models were felt adequate to capture the policy optimisation proble, facing a country. As models have come increasingly to concentrate on the dynamics of macroeconomic variables and the interdependence of economies has become more obvious it has become necessary to modify and extend our optimisation methods. The problem of dynamic models is easily dealt with using the standard techniques of optimal control theory i.e. dynamic programming or Pontryagin methods. The problem of interdependence can be handled by use of game theoretic concepts. We propose to set out the standard solution concepts of game theory in a static context because we feel this gives an intuition for the issues which it is difficult to obtain from the more technically demanding dynamic game literature. As an application we will consider throughout the problem of policy optimisation with interdependent economies.

Suggested Citation

  • Turner, Paul, 1983. "A static framework for the Analysis of Policy Optimisation with Interdependent Economies," The Warwick Economics Research Paper Series (TWERPS) 235, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:235

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. David Currie & Paul Levine, 1985. "Macroeconomic Policy Design in an Interdependent World," NBER Chapters, in: International Economic Policy Coordination, pages 228-273, National Bureau of Economic Research, Inc.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:235. 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: (Margaret Nash). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.