Dynamic games in macroeconomics

Łukasz Balbus, Kevin Reffett, Łukasz Woźny

Research output: Chapter in Book/Report/Conference proceedingChapter

2 Citations (Scopus)

Abstract

In this chapter, we survey how the methods of dynamic and stochastic games have been applied in macroeconomic research. In our discussion of methods for constructing dynamic equilibria in such models, we focus on strategic dynamic programming, which has found extensive application for solving macroeconomic models. We first start by presenting some prototypes of dynamic and stochastic games that have arisen in macroeconomics and their main challenges related to both their theoretical and numerical analysis. Then, we discuss the strategic dynamic programming method with states, which is useful for proving existence of sequential or subgame perfect equilibrium of a dynamic game. We then discuss how these methods have been applied to some canonical examples in macroeconomics, varying from sequential equilibria of dynamic nonoptimal economies to time-consistent policies or policy games. We conclude with a brief discussion and survey of alternative methods that are useful for some macroeconomic problems.

Original languageEnglish (US)
Title of host publicationHandbook of Dynamic Game Theory
PublisherSpringer International Publishing
Pages729-778
Number of pages50
ISBN (Electronic)9783319443744
ISBN (Print)9783319443737
DOIs
StatePublished - Aug 12 2018

Fingerprint

Dynamic Games
Macroeconomics
Stochastic Games
Dynamic Programming
Subgame Perfect Equilibrium
Numerical Analysis
Theoretical Analysis
Dynamic games
Prototype
Game
Alternatives
Model

Keywords

  • Approximating sets
  • Computing correspondences
  • Markov equilibria
  • Non-optimal economies
  • Numerical methods
  • Perfect public equilibria
  • Policy games
  • Sequential equilibria
  • Strategic dynamic programming
  • Time-consistency problems

ASJC Scopus subject areas

  • Mathematics(all)
  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

Cite this

Balbus, Ł., Reffett, K., & Woźny, Ł. (2018). Dynamic games in macroeconomics. In Handbook of Dynamic Game Theory (pp. 729-778). Springer International Publishing. https://doi.org/10.1007/978-3-319-44374-4_18

Dynamic games in macroeconomics. / Balbus, Łukasz; Reffett, Kevin; Woźny, Łukasz.

Handbook of Dynamic Game Theory. Springer International Publishing, 2018. p. 729-778.

Research output: Chapter in Book/Report/Conference proceedingChapter

Balbus, Ł, Reffett, K & Woźny, Ł 2018, Dynamic games in macroeconomics. in Handbook of Dynamic Game Theory. Springer International Publishing, pp. 729-778. https://doi.org/10.1007/978-3-319-44374-4_18
Balbus Ł, Reffett K, Woźny Ł. Dynamic games in macroeconomics. In Handbook of Dynamic Game Theory. Springer International Publishing. 2018. p. 729-778 https://doi.org/10.1007/978-3-319-44374-4_18
Balbus, Łukasz ; Reffett, Kevin ; Woźny, Łukasz. / Dynamic games in macroeconomics. Handbook of Dynamic Game Theory. Springer International Publishing, 2018. pp. 729-778
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