Equilibrium Strategies in a Fiscal-Monetary Game : a Simulation Analysis

• Autorzy: Irena Woroniecka-Leciejewicz
• Języki publikacji: EN

Abstrakty

EN

The results from a simulation analysis of the policy-mix have been presented, carried out in a fiscal-monetary game, in which fiscal and monetary authorities make decisions from the point of view of realizing their own respective economic objectives. In order to represent the interrelations between, on the one hand, the instruments of fiscal policy and of monetary policy, and, on the other hand - the economic effects resulting from their application, a modified logistic function was used. The method adopted enables consideration of the specificity of the effects of these instruments on the business cycle, consisting in the limited effectiveness of applying any extremely restrictive or expansive policy, and the respective impact on the economy. The simulation study was meant to show the influence exerted both by the parameters of the function and the priorities of the fiscal and monetary authorities on the Nash equilibrium state, corresponding to the choice of a particular combination of budgetary and monetary policies. (original abstract)

Słowa kluczowe

EN

Monetary policy; Fiscal policy; Simulation; Nash equilibrium

PL

Polityka pieniężna; Polityka fiskalna; Symulacja; Równowaga Nasha

• Czasopismo: Operations Research and Decisions
• Rocznik: 2015
• Tom: 25
• Numer: nr 2
• Strony: 75--100

Twórcy

autor

Irena Woroniecka-Leciejewicz

• Polish Academy of Sciences, Warszawa

Bibliografia

• [1] BEETSMA R., JENSEN H., Monetary and fiscal policy interactions in a micro-founded model of a monetary union, Journal of International Economics, 2005, 67 (2), 320-352.
• [2] BENNETT N., LOAYZA H., Policy Biases when the Monetary and Fiscal Authorities Have Different Objectives, Central Bank of Chile Working Papers, 2000, No. 66.
• [3] BLACKBURN K., CHRISTENSEN M., Monetary policy and policy credibility. Theories and evidence, Journal of Economic Literature, 1989, 27, 1-45.
• [4] BLINDER A.S., Central Bank credibility: Why do we care? How do we build it?, American Economic Review, December 2000, 1421-1431.
• [5] BLINDER A.S., Issues in the coordination of monetary and fiscal policy, [in:] Monetary Policy in the 1980s, Federal Reserve Bank of Kansas City, 1983, 3-34.
• [6] CANZONERI M., CUMBY R., DIBA B., The interaction between monetary and fiscal policy, [in:] Handbook of Monetary Economics, Vol. 3B, B.M. Friedman, M. Woodford (Eds.), The Netherlands, North-Holland, 2011, 935-999.
• [7] EIJFFINGER S.W., DEHAAN J., The political economy of central bank independence, Princeton University, Princeton 1996.
• [8] GJEDREM S., Monetary policy - the importance of credibility and confidence, BIS Review, 2001 (7), 1-13.
• [9] KOT A., Methods of quantifying monetary and fiscal restrictiveness and the policy mix in accession countries, Bank i Kredyt, 2003 (6), 20-28 (in Polish).
• [10] LINNEMANN L., SCHABERT A., Debt non-neutrality, policy interactions, and macroeconomic stability, Working Paper International Economics Review (Philadelphia), 2010, 51 (2), 461-474.
• [11] MARSZAŁEK P., Coordination of monetary and fiscal policies as a prerequisite for the stability of price levels, PWN, Warszawa 2009.
• [12] MARSZAŁEK P., Game theory applied to the study of the coordination of monetary and fiscal policy, [in:] Studies on Central banking, W. Przybylska-Kapuścińska (Ed.), Zeszyty Naukowe AE w Poznaniu, Poznań 2005 (56), 224-247.
• [13] MCCALLUM B., Inflation determination with Taylor rules: Is New-Keynesian analysis critically flawed? Journal of Monetary Economics, 2009, 56, 1101-1108.
• [14] NORDHAUS W.D., Policy Games: Coordination and independence in monetary and fiscal policies, Brookings Papers on Economic Activity, 1994 (2), 139-215.
• [15] ROMER C.D., Federal reserve information and the behavior of interest rates, American Economic Review, 2000, 90 (3), 429-457.
• [16] ROTEMBERG J., WOODFORD M., Interest rate rules in an estimated sticky price model, [in:] Monetary Policy Rules, J.B. Taylor (Ed.), University of Chicago Press, Chicago 1999.
• [17] SARGENT T., WALLACE N., Some unpleasant monetarist arithmetic, Federal Reserve Bank of Minneapolis Quarterly Review, 1981, 5, 1-17.
• [18] SZPUNAR P., Monetary policy. The goals and conditions for effectiveness, PWE, Warszawa 2000 (in Polish).
• [19] TAYLOR J.B., Discretion versus policy rules in practice, Carnegie-Rochester Conference Series on Public Policy, 1993, 39, 195-214.
• [20] WALSH C., Transparency in monetary policy, FRBSF Economic Letter, 2001 (26).
• [21] WOJTYNA A., Essays on the independence of the central bank, PWN, Warsaw 1998 (in Polish).
• [22] WOJTYNA A., Independence of the central bank and theoretical and practical aspects of the coordination of monetary and fiscal policy, Bank i Kredyt, 1996 (6), 87-101 (in Polish).
• [23] WORONIECKA-LECIEJEWICZ I., Problem of the choice of a policy-mix in the fiscal-monetary game with application of the logistic function, Studia i Materiały Informatyki Stosowanej, 2012, 4 (8), 29-38 (in Polish).
• [24] WORONIECKA-LECIEJEWICZ I., Analysis of the policy-mix considering both the interactions between the central bank and the government and their preferences, Zeszyty Naukowe Wydziału Informatycznych Technik Zarządzania Wyższej Szkoły Informatyki Stosowanej i Zarządzania, Współczesne Problemy Zarządzania, Warsaw 2011 (1), 39-62 (in Polish).
• [25] WORONIECKA-LECIEJEWICZ I., Decision interactions of monetary and fiscal authorities in the choice of policy mix, Journal of Organisational Transformation and Social Change, special issue Corruption and Good Governance, Intellect - Publishers of Original Thinking, UK, 2010, 7 (2), 189-210.
• [26] WORONIECKA-LECIEJEWICZ I., Equilibrium in the fiscal-monetary game and the priorities of the central bank and the government, [in:] Modeling Preferences and Risk '10, T. Trzaskalik (Ed.), The Karol Adamiecki University of Economics in Katowice, Katowice 2010, 327-343 (in Polish).
• [27] WORONIECKA-LECIEJEWICZ I., Analysis of equilibrium states in the fiscal-monetary game with a finite number of strategies, [in:] Social and human capital - the information society - economy - management - computer science, J.W. Owsiński (Ed.), Studia i Materiały Polskiego Stowarzyszenia Zarządzania Wiedzą, Bydgoszcz 2010, 32, 49-61 (in Polish).
• [28] WORONIECKA-LECIEJEWICZ I., The prisoner's dilemma and other cases in the monetary-fiscal game; [in:] Operations and system research: decisions, the economy, human capital and quality, J.W. Owsiński, Z. Nahorski, T. Szapiro (Eds.), Ser. Badania Systemowe, IBS PAN, Warsaw 2008, 64, 161-172 (in Polish).
• [29] WORONIECKA I., The Pareto-optimality of solutions to the game played between the central bank and the government, [in:] Modeling Preferences and Risk '08, T. Trzaskalik (Ed.), Katowice 2008, 127-142 (in Polish).
• [30] WORONIECKA I., Analysis of the priorities of the central bank in interest rate policy, Ekonomista, 2007 (4), 559-580 (in Polish).
• [31] WORONIECKA I., Macroeconomic policy game played between the central bank and the government, [in:] Operations and System Research 2006. System Analysis in the Global Knowledge-Based Economy: e-Challenges, E. Urbańczyk, A. Straszak, J.W. Owsiński (Eds.), Akademicka Oficyna Wydawnicza EXIT, Warszawa 2006, 153-166.

Identyfikatory

DOI

10.5277/ord150205