Financial Policies and Dynamic Game Simulation in Poland and Hungary

Yoshino Hisao

No 187, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Recently, steady economic growth rates have been kept in Poland and Hungary. Moneysupplies are growing rather rapidly in these economies. In large, exchange rates have trends ofdepreciation. Then, exports and prices show the steady growth rates. It can be thought that percapita GDPs are in the same level and development stages are similar in these two countries. It isassumed that these two economies have the same export market and export goods are competing init. If one country has an expansion of monetary policy, price increase and interest rate decrease.Then, exchange rate decrease. Exports and GDP will increase through this phenomenon. At thesame time, this expanded monetary policy affects another country through the trade. This mutualrelationship between two countries can be expressed by the Nash-equilibrium in the Game theory.In this paper, macro-econometric models of Polish and Hungarian economies are built and theNash- equilibrium is introduced into them.

Keywords: East Europe; Poland; Hungary; Monetary policy; Nash-equilibrium; Game theory; Macro-econometric model; Trade; Simulation; Reaction function; Money supply; Central bank (search for similar items in EconPapers)
JEL-codes: C73 E17 E52 F42 (search for similar items in EconPapers)
Date: 2009-03-01
New Economics Papers: this item is included in nep-cmp and nep-tra
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 187. 2009-03-01

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