The Strategic Use of Economic Models in a Macro Game
New Zealand Economic Papers, Vol. 25, June 1991
Posted: 14 Dec 2009
Date Written: 1991
This paper develops a macro game with a government and a union as players. The game consists of the players selecting from amongst a set of competitive reduced forms. The selected forms in conjunction with the true model determine the non-cooperative equilibrium values of the endogenous variables. The main conclusion to emerge is that the players may select different models even if their beliefs as to which is the true model are identical.
Keywords: Macro game, government, union, non-cooperative equilibrium, models
JEL Classification: F41, C70, E10
Suggested Citation: Suggested Citation