We study the relationship between equilibrium existence and uniqueness in LQ-games, and the classical theory of economic policy. By focusing on system controllability, we find necessary conditions for the existence and uniqueness of the Nash equilibrium that generalize results in the existing...

Rational expectations are often used as an argument against policy activism, as they may undermine or neutralize the policymaker’s actions. Although this sometimes happens, rational expectations do not always imply policy invariance or ineffectiveness. In fact, in certain circumstances...

Rational expectations are often used as a strong argument against policy activism, as they may undermine or neutralize the policymaker’s actions. Although this sometimes happens, rational expectations do not always imply policy invariance or ineffectiveness. In fact, in certain circumstances...

This paper shows the relationship between static controllability (well-known as Tinbergen's golden rule) and the existence and other properties of the Nash equilibrium in a dynamic setting augmented with rational expectations (RE) for future behavior. We derive new theorems which state...