I’ve put the model by Liu and Pappa (JEDC, 2008) and solved it under Nash for both discretion and commitment (Ramsey). It’s meant to be a simple two-country model but as is typical in the literature, under Nash it resembles a closed economy.
Strangely, the loss is higher under commitment than under discretion.
I am at a loss in trying to figure out how I got this result but the model is extremely simple so it should not have occurred. I also get something similar under coordination.
Does anyone know what’s going on?PappaLiuNashComm.mod (1.1 KB)