Analysis of strategies in a monetary-fiscal game. The case of Poland

• Autorzy: Krus L. , Woroniecka-Leciejewicz I.
• Języki publikacji: EN

Abstrakty

EN

A monetary-fiscal game describing the interactions of the fiscal and monetary authorities is formulated and analyzed. A macroeconomic model for the Polish economy has been formulated on the basis of the concept of New Neoclassical Synthesis and respectively extended so as to accommodate the effects of fiscal policy. Several variants of the model have been estimated using statistical data for the Polish economy. It is assumed in the game that each party (monetary and fiscal) tries to achieve its own goal: the fiscal authority – the assumed GDP growth, and the monetary authority – an inflation level. The best response strategies of the authorities and the Nash equilibria are calculated and analyzed in two cases, namely when the decisions are made simultaneously and sequentially. The simulation results obtained indicate that when the authorities try to achieve independently their goals, in a general case the Nash equilibrium is not Pareto optimal. The best response strategies may lead to conflict escalation and to results which are not beneficial for both parties.

Słowa kluczowe

EN

monetary-fiscal game; macroeconomic modeling; Nash equilibria; Pareto optimality

• Wydawca: Systems Research Institute, Polish Academy of Sciences
• Czasopismo: Control and Cybernetics
• Rocznik: 2016
• Tom: Vol. 45, no. 2
• Strony: 163--183
• Opis fizyczny: Bibliogr. 16 poz., rys.

Twórcy

autor

Krus L.

• Systems Research Institute, Polish Academy of Sciences, Newelska 6, 01-447 Warsaw, Poland Lech

autor

Woroniecka-Leciejewicz I.

Bibliografia

• [1] Bennett H. and Loayza N. (2001) Policy Biases when the Monetary and Fiscal Authorities have Different Objectives. Central Bank of Chile Working Papers, No 66.
• [2] Blinder A. S. (1983) Issues in the Coordination of Monetary and Fiscal Policy. In: Monetary Policy in the 1980s. Federal Reserve Bank of Kansas City, 3-34.
• [3] Darnault N. and Kutos P. (2005) Poland’s policy mix: fiscal or monetary leadership? ECFIN Country Focus, 2 (1), 1-6.
• [4] Dixit A. and Lambertini L. (2001) Monetary-Fiscal Policy Interactions and Commitment versus Discretion in a Monetary Union. European Economic Review, 45, 977-987.
• [5] Gali J. (2010) The New Keynesian Approach to Monetary Policy Analysis: Lessons and New Directions. In: V. Wieland, ed., The Science and Practice of Monetary Policy Today. Springer, 9-19. Krus L. and Woroniecka-Leciejewicz I. (2017) Monetary-Fiscal Game Analyzed Using a Macroeconomic Model for Poland. Statistical Review; accepted for publication in 2017.
• [6] Krus L. and Woroniecka-Leciejewicz I. (2016) Analiza interakcji polityki fiskalnej i monetarnej z wykorzystaniem teorii gier na przykładzie gospodarki polskiej (Analysis of interactions of the fiscal and monetary policies in Poland using the game theory; in Polish). Submitted to Quantitative Methods in Economics.
• [7] Krus L. and Woroniecka-Leciejewicz I. (2015) Fiscal-Monetary Game Analyzed with Use of a Dynamic Macroeconomic Model. In: B. Kaminski et al., eds., GDN 2015, Springer LNBIP 218, 199-208.
• [8] Krus L. (2014) Computer Based Support in Multicriteria Bargaining with Use of the Generalized Nash Solution Concepts. In: K. Atanassov et al., eds., Modern Approaches in Fuzzy Sets, Intuitionistic Fuzzy Sets, Generalized Networks and Related Topics, Vol. II: Applications. SRI PAS, Warsaw, 43-60.
• [9] Krus L. (2011) Wielokryterialne decyzje kooperacyjne, metody wspomagania komputerowego (Multicriteria cooperative decisions, computer based suport methods; in Polish). Instytut Badań Systemowych PAN, Series: Badania systemowe, 70, Warsaw.
• [10] Lambertini L. and Rovelli R. (2003) Monetary and Fiscal Policy Coordination and Macroeconomic Stabilization. A Theoretical Analysis. Available at SSRN: https://ssrn.com/abstract= 380322 or http://dx.doi.org/10. 2139/ssrn.380322
• [11] Libich J., Nguyen D. and Stehlik P. (2014) Monetary Exit and Fiscal Spillovers, MPRA paper, 1-32. Marsza lek P. (2009) Koordynacja polityki pieniężnej i fiskalnej jako przesłanka stabilności poziomu cen (Coordination of the monetary and fiscal policies as the prerequisite for the price level stability; in Polish), PWN, Warsaw.
• [12] Nash J.F. (1951) Non-cooperative Games. Annals of Mathematics. 54 (4), 286-295.
• [13] Nordhaus W. D. (1994) Policy Games: Coordination and Independence in Monetary and Fiscal Policies. Brookings Papers on Economic Activity, 2, 139–215.
• [14] Stawska J. (2014) Wpływ policy-mix na wzrost gospodarczy i poziom bezrobocia w Polsce (An influence of policy-mix on the economic growth and unemployment in Poland; in Polish). Finanse, Zeszyty Naukowe Uniwersytetu Szczecińskiego, No 804, Rynki Finansowe, Ubezpieczenia, 67, 667-677.
• [15] Woroniecka-Leciejewicz I. (2015) Equilibrium strategies in a fiscal-monetary game. A simulation analysis, Operations Research & Decisions, 25 (4), 75-100.
• [16] Woroniecka-Leciejewicz I. (2010) Decision interactions of monetary and fiscal authorities in the choice of policy mix. Journal of Organisational Transformation and Social Change, 7 (4), 189-210.

Uwagi

PL

Opracowanie ze środków MNiSW w ramach umowy 812/P-DUN/2016 na działalność upowszechniającą naukę (zadania 2017).