Time-consistent implementation in macroeconomic games

Jean Barthélemy and Eric Mengus

Theoretical Economics, 2024, vol. 19, issue 3

Abstract: The commitment ability of governments is neither infinite nor zero but intermediate. In this paper, we determine the commitment ability that a government needs to implement a unique equilibrium outcome and rule out self-fulfilling expectations. We show that, in a large class of static macroeconomic games, the government can obtain a unique equilibrium with any low level of commitment ability. We finally derive implications for models of bailouts and capital taxation.

Keywords: Implementation; limited commitment; policy rules (search for similar items in EconPapers)
JEL-codes: C73 E58 E61 G28 (search for similar items in EconPapers)
Date: 2024-07-24
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Related works:
Working Paper: Time-Consistent Implementation in Macroeconomic Games (2022)
Working Paper: Time-consistent implementation in macroeconomic games (2022)
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