Why the EMS? Dynamic Games and the Equilibrium Policy Regime

David Begg and Charles Wyplosz
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David Begg: Birkbeck College

Chapter 6 in Global Macroeconomics: Policy Conflict and Cooperation, 1987, pp 193-236 from Palgrave Macmillan

Abstract: Abstract Given a complete specification of a policy maker’s preferences (her objective function) and of the economic structure which constrains the choice of policy variables, it is conceptually straightforward to compute the optimal policy. Within such a framework, the notion of a policy regime has little meaning. The dependence of the optimal policy on the specification of the objective function and on the economic structure is essentially continuous: small changes in preferences or constraints will typically lead to small changes in the rules which govern optimal policies.

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Real Exchange Rate; Real Interest Rate (search for similar items in EconPapers)
Date: 1987
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DOI: 10.1007/978-1-349-18916-8_6

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