Friday, 26 March 2010: 17:25
The paper studies the relationship between equilibrium existence in LQ games and the classical theory of economic policy, providing the framework to generalize some recent results. By focusing on system control-ability, instead of the controllability by one or some of the players, we find conditions for the existence of the Nash equilibrium that extend those required by the previous literature. The usefulness of our results is described by some examples in the field of international monetary and trade agreements. The essence of this problem is already well known in the economic literature, at least since Mundell (1968) raised the nth-country problem.