Dynamic Game Theory and Models of International Macroeconomic Policy

In this paper, we provide a survey of dynamic game theory with special emphasis on past and possible future applications to problems of international economic policy making, where we concentrate on macroeconomic and stabilization policy problems. First, the paper gives a brief introduction to the theory of dynamic games. Next, we show by example that dynamic game theory can provide insights into problems of macroeconomics, in particular international stabilization policies in the context of a monetary union. Key-Words: Dynamic games, optimization, game theory, monetary policy, fiscal policy, macroeconomics, international economics, cooperation.