Monetary Consequences of Fiscal Stress in a Game Theoretic Framework

Monetary Consequences of Fiscal Stress in a Game Theoretic Framework

This paper maps Leeper and Walker (2011) model into a game theory framework to study about the strategic aspects of monetary and fiscal interaction under a fiscal stress caused by an ageing population problem. The paper reveals that the outcomes of the game depend on the parameters of the underlying...

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Bibliographic Details
Main Authors: Nguyen Dat Thanh, Hoang Viet Anh
Format: Article
Language:English
Published: Sciendo 2020-07-01
Series:Journal of Central Banking Theory and Practice
Subjects:
monetary-fiscal interaction
game theory
ageing population
dynamic leadership
stochastic timing
e63
c70
Online Access:https://doi.org/10.2478/jcbtp-2020-0026
Description
Summary:This paper maps Leeper and Walker (2011) model into a game theory framework to study about the strategic aspects of monetary and fiscal interaction under a fiscal stress caused by an ageing population problem. The paper reveals that the outcomes of the game depend on the parameters of the underlying model, the size of the projected transfers and the public inflation expectation. The findings show that commitment to the target (inflation, government transfers) plays a crucial role in the policy interaction.
ISSN:2336-9205

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