The Theory of Economic Policy in a Strategic Context

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  • Format: Hardcover
  • Copyright: 2012-12-17
  • Publisher: Cambridge Univ Pr
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Developing a new and highly innovative theory of economic policy, this book deals with conflicts between strategic actions by public and private agents. It builds on the Lucas critique but also applies the tools introduced by Tinbergen and Theil to dynamic policy games and from there derives a new theory of economic policy. Its main propositions describe such properties in the models currently used for policy-making as neutrality and equilibrium existence; uniqueness; and multiplicity. These properties are key to understanding the impact of concepts such as rational expectations, time inconsistency, communication and the use of policy announcements. As the numerous examples show, they are useful both for model building and for devising optimal institutions. The Theory of Economic Policy in a Strategic Context is an essential but accessible tool for economic researchers involved in policy questions.

Table of Contents

List of figures
List of tables
Common symbols
An overview: the realm of economic policy
The Classical Theory of Economic Policy
From the Classical to the New Theory of Economic Policy
The Lucas critique
Policy games: an introduction
The New Theory of Economic Policy: Statics
A theory of strategic conflict: foundations
From individual players to system controllability
Conflicts and coordination among groups
Announcements as a coordination mechanism
The New Theory of Economic Policy: Dynamics
Controllability in a strategic dynamic setting
Dynamic policy games with rational expectations
Credibility, dynamic controllability and rational expectations
Institution building: inflation, sustainable growth and debt control
Table of Contents provided by Publisher. All Rights Reserved.

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