Sensitivity analysis for a dynamic macroeconomic policy game in a monetary union

Dmitri Blueschke (), Viktoria Blueschke-Nikolaeva () and Reinhard Neck ()
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Dmitri Blueschke: University of Klagenfurt
Viktoria Blueschke-Nikolaeva: University of Klagenfurt

Central European Journal of Operations Research, 2024, vol. 32, issue 2, No 13, 507-520

Abstract: Abstract In this paper, we examine the sensitivity of the results of an earlier paper which presented and analyzed a dynamic game model of a monetary union with coalitions between governments (fiscal policy makers) and a common central bank (monetary policy maker). Here we examine alternative values of the parameters of the underlying model to show how the earlier results depend on the numerical parameter values chosen, which were obtained by calibration instead of econometric estimation. We demonstrate that the main results are qualitatively the same as in the original model for plausible smaller and larger values of the parameters. For the few cases where they differ, we interpret the deviations in economic terms and illustrate the policies and their macroeconomic effects resulting from the change to the parameter under consideration for one of these cases.

Keywords: Dynamic games; Feedback Nash equilibrium; Pareto solution; Sensitivity analysis; Monetary union; Public debt; Coalitions (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10100-024-00907-2

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