Coalition or non-coalition: Greedy scalar equilibrium in the semi-cooperative game with the role of speculators in the game between fiscal and monetary policy-makers

Subject Areas : Monetary Economics

Davoud Foroutannia ¹ , Davoud Mahmoudinia ^{2 *}

1 - Department of Mathematics, Vali-e-Asr University of Rafsanjan, Rafsanjan, Iran, [e-mail]
2 - Department of Economics, Vali-e-Asr University of Rafsanjan, Rafsanjan, Iran, (Corresponding Author), [e-mail]

Received: 2024-09-03 Accepted : 2025-01-11 Published : 2025-01-11

Keywords: Game Theory, Coalition Game, Semi-Cooperative Game, Financial Policy, Speculators JEL Classification: O53, E6, E52, C72, C71,

Abstract :

This study examines the role of fiscal policymakers, monetary policymakers, and currency speculators in macroeconomic stability, focusing on Iran. Using a game-theoretic approach, it compares non-cooperative Nash equilibrium, where the government and central bank adopt contractionary policies and speculators remain passive, with a semi-cooperative coalition aimed at reducing speculator profits and minimizing losses for policymakers. The findings reveal that collaboration among players in a coalition achieves higher social welfare and better economic outcomes than non-cooperative strategies.

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