Controllability and non-neutrality of economic policy: The Tinbergen’s approach in a strategic context

Nicola Acocella and Giovanni Di Bartolomeo ()
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Nicola Acocella: University of Rome I

Macroeconomics from EconWPA

Abstract: In the last 20 years issues of policy effectiveness and neutrality (notably with reference to monetary policy) have been increasingly raised in the context of static LQ (linear-quadratic) policy games. The general conditions ensuring policy non-neutrality in a strategic environment remains however to be inquired. We state these conditions by generalizing the classical theory of economic policy developed by Tinbergen and others to such a context. We also state necessary and sufficient conditions for the existence of Nash and Stackelberg equilibria. We finally show that the conditions for monetary policy effectiveness asserted in the literature respect our general conditions.

Keywords: LQ-policy games; policy ineffectiveness; static 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: 2005-04-26
Note: Type of Document - pdf; pages: 21
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