Uncertainty in basic short-term macroeconomic models with angel-daemon games

Joaquim Gabarro and Maria Serna

International Journal of Data Analysis Techniques and Strategies, 2017, vol. 9, issue 4, 314-330

Abstract: We propose the use of an angel-daemon framework to perform an uncertainty analysis of short-term macroeconomic models. The angel-daemon framework defines a strategic game where two agents, the angel and the daemon, act selfishly. These games are defined over an uncertainty profile which presents a short and macroscopic description of a perturbed situation. The Nash equilibria on these games provide stable strategies in perturbed situations, giving a natural estimation of uncertainty. We apply the framework to the uncertainty analysis of linear versions of the IS-LM and the IS-MP models.

Keywords: uncertainty profiles; zero-sum games; angel-daemon games; strategic games; IS-LM model; IS-MP model. (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ids:injdan:v:9:y:2017:i:4:p:314-330

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