Government and economy: a non-zero sum game

TERRA ECONOMICUS, , Vol. 11 (no. 3.1),
p. 20-33

An adequate interaction between government and economy is the key problem of modern countries. How can we improve the functioning of the government if this conflict of interests would be systematic and unavoidable by its nature? What would be better: to have more government – and more limitations for business; or less regulation (with more freedom for business) – and less economic stability? Although an admissible solution depends on many factors, including a concrete situation in a country in a certain period, the right answer could be found only if we use the right instrument of analysis. The article provides a series of arguments for the game theory as an optimal method of analyzing interactions between government and economy at this stage of economic development. Examples from the area of monetary policy are given.

Keywords: government; monetary policy; game theory; economic interactions; economic forecasting

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606