Commitment and coordination in a dynamic game model of international economic policy-making

@article{Neck1995CommitmentAC,
  title={Commitment and coordination in a dynamic game model of international economic policy-making},
  author={Reinhard Neck and Engelbert J. Dockner},
  journal={Open Economies Review},
  year={1995},
  volume={6},
  pages={5-28}
}
In this paper, we consider a dynamic game model of two identical countries. Policy-makers of both countries have quadratic intertemporal objective functions and want to stabilize domestic output, domestic inflation, and the real rate of exchange. We present different analytical and numerical solutions for this policy game. Noncooperative open-loop equilibria are interpreted as requiring unilateral commitment and policy-makers' credibility. Potential gains from cooperation are present, as the… CONTINUE READING

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