Game of thrones: accommodating monetary policies in a monetary union
type: Item
instance of: scholarly article
title: Game of thrones: accommodating monetary policies in a monetary union
zbMATH Open document ID: 1405.91429
author: D. Blueschke
author: Reinhard Neck
published in: Games
publication date: 2018-07-10T00:00:00Z
review text: Summary: In this paper, we present an application of the dynamic tracking games framework to a monetary union. We use a small stylized nonlinear three-country macroeconomic model of a monetary union to analyze the interactions between fiscal (governments) and monetary (common central bank) policy makers, assuming different objective functions of these decision makers. Using the OPTGAME algorithm, we calculate solutions for several games: a noncooperative solution where each government and the central bank play against each other (a feedback Nash equilibrium solution), a fully-cooperative solution with all players following a joint course of action (a Pareto optimal solution) and three solutions where various coalitions (subsets of the players) play against coalitions of the other players in a noncooperative way. It turns out that the fully-cooperative solution yields the best results, the noncooperative solution fares worst and the coalition games lie in between, with a broad coalition of the fiscally more responsible countries and the central bank against the less thrifty countries coming closest to the Pareto optimum.
Mathematics Subject Classification ID: 91B64
Mathematics Subject Classification ID: 91A25
Mathematics Subject Classification ID: 91A10
Mathematics Subject Classification ID: 91A12
zbMATH DE Number: 6901019
zbMATH Keywords: dynamic game
zbMATH Keywords: feedback Nash equilibrium
zbMATH Keywords: Pareto solution
zbMATH Keywords: monetary union
zbMATH Keywords: macroeconomics
zbMATH Keywords: public debt
zbMATH Keywords: coalitions
describes a project that uses: OPTGAME3
MaRDI profile type: Publication
full work available at URL: g9010009
OpenAlex ID: W2776526015
cites work: Fiscal Devaluations
cites work: How important is fiscal policy cooperation in a currency union?
cites work: Coordination and Crisis in Monetary Unions*
cites work: Dynamic modelling of monetary and fiscal cooperation among nations
cites work: A simple model of imperfect competition where 4 are few and 6 are many
cites work: OPTGAME3: A Dynamic Game Solver and an Economic Example
Wikidata QID: Q130205721
DOI: 10.3390/G9010009
description: scientific article; zbMATH DE number 6901019