Time-Consistent Implementation in Macroeconomic Games

Jean Barth Lemy and Eric Mengus
Authors registered in the RePEc Author Service: Jean Barthélemy

Working papers from Banque de France

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 undesired self-fulfilling expectations. We first show that, in a large class of static macroeconomic games, the government can implement any time-consistent equilibrium with any low level of commitment ability. We then show that this result may not be robust to imperfect information, fixed costs or repeated interactions. We finally derive implications for models of bailouts, inflation bias, 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)
Pages: 70 pages
Date: 2022
New Economics Papers: this item is included in nep-cba and nep-gth
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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https://publications.banque-france.fr/sites/defaul ... ocuments/wp902_0.pdf

Related works:
Journal Article: Time-consistent implementation in macroeconomic games (2024)
Working Paper: Time-consistent implementation in macroeconomic games (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:902

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