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Non-neutrality of economic policy: An application of the Tinbergen-Theil’s approach to a strategic context

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  • Nicola Acocella

    (University of Rome I)

  • Giovanni Di Bartolomeo

    (University of Rome I)

Abstract

Issues of policy effectiveness and neutrality are widespread in the economic literature. They have been increasingly raised in specific contexts within the class of LQ (linear-quadratic) policy games in the last 20 years, notably with reference to monetary policy. The more general conditions ensuring nonneutrality in a strategic environment remain however to be inquired. We fill this gap by applying the classical theory of economic policy to a strategic context. This is also useful to highlight some existence conditions for policy game solutions. We restrict ourselves to the common LQ-games in a static perfect information framework, but our simple logic can be extended to other more general situations.

Suggested Citation

  • Nicola Acocella & Giovanni Di Bartolomeo, 2005. "Non-neutrality of economic policy: An application of the Tinbergen-Theil’s approach to a strategic context," Macroeconomics 0504035, University Library of Munich, Germany, revised 26 Apr 2005.
    • Handle: RePEc:wpa:wuwpma:0504035
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    1. Wieliczko, Barbara, 2012. "Future CAP - food security and safety are the key," 126th Seminar, June 27-29, 2012, Capri, Italy 126039, European Association of Agricultural Economists.
    2. Nicola Acocella, 2022. "Rediscovering Economic Policy in Europe?," Review of Economics and Institutions, Università di Perugia, vol. 13(1-2).

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    More about this item

    Keywords

    LQ-policy games; policy ineffectiveness; controllability.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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