The Nash equilibrium in the policy mix model for Czechia, Hungary, and Romania

Abstract

The aim of the paper is to compare the sensitivity of a government's fiscal policy and a central bank's monetary policy, which are in Nash equilibrium in the case of a noncooperative game between the government and the central bank in Czechia, Hungary, and Romania. The analysis for each country is conducted from the date of its accession to the European Union. The research period for Czechia and Hungary includes the quarters 2004Q2-2019Q2, and for Romania, 2007Q1-2019Q2. The study has demonstrated that in Romania the government's response to interest rate changes is the strongest and the central bank's response to changes in the budget deficit turned out to be the weakest. On the other hand, the strongest response of the central bank to changes in the budget deficit turned out to be in Hungary, which means that the central bank in Hungary makes a significant correction of interest rates as a result of changes in the budget deficit.

Determinants of Inclusive Growth in the Context of the Theory of Sustainable Finance in the European Union Countries

“…A properly designed fiscal redistribution policy can contribute to the improvement of human capital, health, infrastructure, and education, which, as a result, should benefit the poorer part of society and stimulate inclusive growth [25,26]. The central bank and its monetary policy [27] also have an impact on inclusive growth, which is reflected in inflation. High inflation deepens the inequalities between the richer and poorer sections of society.…”

Fiscal and Monetary Policy Interactions in Indonesia During Periods of Economic Turmoil in the Us: 2001q1-2014q4

“…Game theory is the basis of the first framework in which the policymakers maximize pay-off from interactions (e.g. Bennett and Loayza, 2000, Lambertini and Rovelli, 2003, Simorangkir, 2007, Stawska et al, 2021. The second framework assumes a general equilibrium relationship among economic variables (e.g.…”