Budget balancing in a two-dimensional macroeconomic model
A two-person nonlinear dynamic game is presented to model the government's strategy to decrease the budget deficit, where Player 1 is the government using fiscal control and Player 2 represents the private sector. In our macroeconomic model the growth rate of the labour force is not known, but...
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Published in | Mathematical and computer modelling of dynamical systems Vol. 13; no. 2; pp. 179 - 192 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Taylor & Francis
01.04.2007
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Subjects | |
Online Access | Get full text |
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Summary: | A two-person nonlinear dynamic game is presented to model the government's strategy to decrease the budget deficit, where Player 1 is the government using fiscal control and Player 2 represents the private sector. In our macroeconomic model the growth rate of the labour force is not known, but its lower and upper bounds are given a priori. This means that the system is uncertain, which makes the determination of an optimal solution (in a Nash, Stackelberg, etc. sense) impossible. Therefore, only a guaranteeing cost control is determined for Player 1. It is shown that the balancing by a guaranteeing cost control is possible even in the most unfavourable situation, when the governmental debt is higher and the volume of fixed capital stock is lower than the equilibrium value. |
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ISSN: | 1387-3954 1744-5051 |
DOI: | 10.1080/13873950600739034 |