
handle: 10419/320262
The commitment ability of governments is neither infinite nor zero but intermediate. In this paper, we determine the commitment ability that a government needs to implement a unique equilibrium outcome and rule out self‐fulfilling expectations. We show that, in a large class of static macroeconomic games, the government can obtain a unique equilibrium with any low level of commitment ability. We finally derive implications for models of bailouts and capital taxation.
G28, limited commitment, C73, policy rules, E61, ddc:330, Implementation, Macroeconomic theory (monetary models, models of taxation), Applications of game theory, E58, implementation
G28, limited commitment, C73, policy rules, E61, ddc:330, Implementation, Macroeconomic theory (monetary models, models of taxation), Applications of game theory, E58, implementation
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