Abstract
It is well known that non-cooperative behaviour of different policy-makers, either central bank and government on a national level or governments of different countries on an international level, may result in severe overall losses and inefficiencies. On the other hand, policy coordination is difficult to achieve, given the mechanisms of negotiations between several policy-making institutions. A solution to this “trade-off” would be a mechanism inducing individual behaviour that ensures efficient (Pareto-optimal) outcomes equivalent to those achieved by cooperation, but without the need of explicit agreements.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Baar, T. and G.J. Olsder (1982): “Dynamic noncopperative game theory.” Academic Press, London et al.
Cohen, D. and P. Michel (1988): “How should control theory be used to calculate a time-consistent government policy?” Review of Economic Studies, 55, pp.263–274.
Dockner, E.J. and R. Neck (1988): “Time-consistency, subgame-perfectness, solution concepts and information patterns in dynamic models of stabilization policies.” Unpublished manuscript, Saskatoon.
Friedman, J.W. (1977): “Oligopoly and the theory of games.” North-Holland, Amsterdam et al.
Haurie, A. and B. Tolwinski (1985): “Definition and properties of cooperative equilibria in a two-player game of infinite duration.” Journal of Optimization Theory and Applications, 46, pp.525–534.
Leitmann, G. (1974): “Cooperative and non-cooperative many players differential games.” Springer Verlag, Vienna.
Levine, P. and D. Currie (1985): “Optimal feedback rules in an open economy macromodel with rational expectations.” European Economic Review, 27, pp.141–163.
Levine, P. and D. Currie (1987): “Does international macroeconomic policy coordination pay and is it sustainable? A two country analysis.” Oxford Economic Papers, 33, pp.38–74.
Miller, M. and M. Salmon (1985): “Dynamic games and the time inconsistency of optimal policy in open economies.” Economic Journal, Supplement, 95, pp.124–137.
Neck, R. and E.J. Dockner (1987): “Conflict and cooperation in a model of stabilization policies: A differential game approach.” Journal of Economic Dynamics and Control, 11, pp. 153–158.
Neck, R. and E.J. Dockner (1988): “Commitment and coordination in a dynamic game model of international economic policy-making.” Unpublished manuscript, Vienna.
Neese, J.W. and R.S. Pindyck (1984): “Behavioural assumptions in decentralised stabilisation policies.” In: A. J. Hughes Hallett (ed.), Applied decision analysis and economic behaviour. Martinus Nijhoff, Dordrecht.
Oudiz, G. and J. Sachs (1984): “Macroeconomic policy coordination among the industrial economies.” Brookings Papers on Economic Activity, (1), pp. 1–64.
Oudiz, G. and J. Sachs (1985): “International policy coordination in dynamic macroeconomic models.” In: W. H. Buiter and R. C. Marston (eds.), International economic policy coordination. Cambridge University Press, Cambridge.
Reinganum, J.F. and N.S. Stokey (1985): “Oligopoly extraction of a common property natural resource: The importance of the period of commitment in dynamic games.” International Economic Review, 26, pp.161–173.
Rogoff, K. (1985): “Can international monetary policy cooperation be counterproductive?” Journal of International Economics, 18, pp.199–217.
Selten, R. (1975): “Reexamination of the perfectness concept for equilibrium points in extensive games.” International Journal of Game Theory, 4, pp.25–55.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1995 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Dockner, E.J., Neck, R. (1995). How Can Decentralized Non-Cooperative Stabilization Policies Be Efficient? — A Differential Game Approach. In: Riedl, A., Winckler, G., Wörgötter, A. (eds) Macroeconomic Policy Games. Studies in Empirical Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-50307-8_3
Download citation
DOI: https://doi.org/10.1007/978-3-642-50307-8_3
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-642-50309-2
Online ISBN: 978-3-642-50307-8
eBook Packages: Springer Book Archive