Abstract
In a world of interdependent economies, rational policy makers in one country must condition their actions on the policies to be expected in other countries and expect others to do the same. Policy selection inevitably acquires the form of a dynamic game. The persistence of world recession since 1974, and the debt crisis which appeared in its wake, has certainly made policy makers more conscious of the links between their economies and that mutual dependence through trade and capital movements means that the available policy choices are also interdependent. In fact, as the current uneven recovery shows, decentralised control of the world economy may effectively limit our ability to steer individual economies.
This research was undertaken, in part, on behalf of the EEC Commission in Brussels, and their support is gratefully acknowledged. However the opinions expressed here are my own, and do not necesarily reflect the policy of the EEC Commission.
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© 1987 Martinus Nijhoff Publishers, Dordrecht
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Hallett, A.J.H. (1987). Optimal Policy Design in Interdependent Economies. In: Carraro, C., Sartore, D. (eds) Developments of Control Theory for Economic Analysis. Advanced Studies in Theoretical and Applied Econometrics, vol 7. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-3495-5_12
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DOI: https://doi.org/10.1007/978-94-009-3495-5_12
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