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Paper Information

Journal:   JOURNAL OF APPLIED ECONOMICS STUDIES IN IRAN   SPRING 2016 , Volume 5 , Number 18 ; Page(s) 1 To 34.
 
Paper: 

GAME THEORY AND ITS ROLE IN DETERMINING OPTIMAL POLICIES AND STRATEGIC INTERACTION BETWEEN FISCAL AND MONETARY POLICYMAKERS (APPLICATION OF DIFFERENTIAL GAME THEORY AND STACKELBERG GAMES)

 
 
Author(s):  MAHMOUDINIA DAVOUD, DALALI ESFAHANI RAHIM, ENGWERDA JACOB, BAKHSHI DASTJERDI RASUL
 
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Abstract: 

In this study, we follow several purpose. In the first section, the game theory concept and the formation of its fundamental concepts is examined. After that, we investigate that how von Neumann-Morgenstern (1944) and john Nash (1950-1953) works, caused the formation of modern game theory. Then, we discussed that how game theory enter to macroeconomic modern space. The achievement of this area can be found in Kydland and Prescott (1977). On the other hand, we consider the importance of differential game. This theory plays an important role in the applicable of strategic interaction between fiscal and monetary policy. Hence by extend Tabellini model (1986) in stackellberg case by open loop and feedback information, the equilibrium model in Iranian economy is investigated. The results show that, converge speed in open loop case is higher than feedback case and also debt equilibrium in the feedback case is lower than open loop case. On the other hand, the result shows that in stackelberg game between government and central bank, the level of debt can be brought to the target level, and even with huge oil revenues, the government could impose policy to prevent the creation of much money by central bank.

 
Keyword(s): GAME THEORY, DIFFERENTIAL GAME, STACKELBERG GAME, FISCAL AND MONETARY POLICY, IRAN ECONOMY
 
References: 
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