Comparative Studies on Cooperative Stochastic Differential Game and Dynamic Sequential Game of Economic Maturity

Dai, Darong (2012): Comparative Studies on Cooperative Stochastic Differential Game and Dynamic Sequential Game of Economic Maturity.

Abstract

In the paper, we are encouraged to investigate the effect of game structure imposed on the minimum-time needed to economic maturity in a dynamic macroeconomic model. Indeed, we have established a basic framework for the comparative study of the cooperative stochastic differential game and dynamic sequential game of economic maturity. Moreover, in a simple stochastic growth model, closed-form solution of the minimum-time needed to economic maturity has been derived with the explicit condition, under which it is confirmed that cooperation between the representative household and the self-interested politician will definitely lead us to much faster economic maturity than that of sequential action, supplied, too. Finally, our model supports the comparative study of the minimum-time needed to economic maturity under different political- institution constraints.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic maturity; Minimum-time objective; Political economy; Sequential equilibrium; Cooperative stochastic differential game
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General

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