Izvorni znanstveni članak
https://doi.org/10.1080/1331677X.2019.1669063
Combined monetary and fiscal policy: the Nash Equilibrium for the case of non-cooperative game
Joanna Stawska
; Institute of Finance, University of Lodz, Lodz, Poland
Maciej Malaczewski
; Department of Econometrics, University of Lodz, Lodz, Poland
Agata Szymańska
; Institute of Economics, University of Lodz, Lodz, Poland
Sažetak
The importance of the central bank and the government conduct- ing their policies has increased recently, with more attention being given to the effectiveness of policy mix. The non-cooperative models of the monetary and fiscal game are frequently employed to study interactions between both authorities. The models assume that the authorities take into account each other’s choices when making decisions. It is also important to remember when seeking equilibrium in the non-cooperative models that in the Nash Equilibrium (which is sought in this study) the parties try to come up with the best response to the opponent’s decision. The aim of the paper is to present the Nash Equilibrium in a non-cooperative game between the government and the central bank using a non-cooperative model of a fiscal-monetary game (a policy-mix MODEL). This study demonstrates that in the Nash Equilibrium in the model, the budget deficit and interest rate of an EU member state depend on the exogenous data (external to the model), such as inflation target, base inflation and the Maastricht deficit limit. This study is enhanced by an analysis of the government and central bank’s sensitivity to the deep parameters of economic variables.
Ključne riječi
Monetary policy; fiscal policy; game theory; Nash equilibrium; non-cooperative game
Hrčak ID:
229697
URI
Datum izdavanja:
22.1.2019.
Posjeta: 1.112 *