Non-neutrality of economic policy: An application of the Tinbergen-Theil's approach to a strategic context

Nicola Acocella and Giovanni Di Bartolomeo ()

No 82, Working Papers from Sapienza University of Rome, Department of Public Economics

Abstract: Issues of policy effectiveness and neutrality are widespread in the economic literature. They have been increasingly raised in specific contexts within the class of LQ (linear-quadratic) policy games in the last 20 years, notably with reference to monetary policy. The more general conditions ensuring nonneutrality in a strategic environment remain however to be inquired. We fill this gap by applying the classical theory of economic policy to a strategic context. This is also useful to highlight some existence conditions for policy game solutions. We restrict ourselves to the common LQ-games in a static perfect information framework, but our simple logic can be extended to other more general situations.

Keywords: LQ-policy games; policy ineffectiveness; controllability. (search for similar items in EconPapers)
JEL-codes: C72 E52 E61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mac
Date: Written
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http://dep.eco.uniroma1.it/docs/working_papers/Wp82.pdf First version, 2005 (application/pdf)

Related works:
Working Paper: Non-neutrality of economic policy: An application of the Tinbergen-Theil’s approach to a strategic context (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:sap:wpaper:82

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