Comparative Studies on Cooperative Stochastic Differential Game and Dynamic Sequential Game of Economic Maturity

Darong Dai

MPRA Paper from University Library of Munich, Germany

Abstract: In the paper, we are encouraged to investigate the effect of game structure imposed on the minimum-time needed to economic maturity in a dynamic macroeconomic model. Indeed, we have established a basic framework for the comparative study of the cooperative stochastic differential game and dynamic sequential game of economic maturity. Moreover, in a simple stochastic growth model, closed-form solution of the minimum-time needed to economic maturity has been derived with the explicit condition, under which it is confirmed that cooperation between the representative household and the self-interested politician will definitely lead us to much faster economic maturity than that of sequential action, supplied, too. Finally, our model supports the comparative study of the minimum-time needed to economic maturity under different political- institution constraints.

Keywords: Economic maturity; Minimum-time objective; Political economy; Sequential equilibrium; Cooperative stochastic differential game (search for similar items in EconPapers)
JEL-codes: C70 D72 O11 (search for similar items in EconPapers)
Date: 2012-10-16
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