Crisis in the Euro Area: Co-opetitive Game Solutions as New Policy Tools
Crisis in the Euro Area: Co-opetitive Game Solutions as New Policy Tools

Author(s): David CARFI, Daniele Schiliro
Subject(s): Economy
Published by: ASERS Publishing
Keywords: European Monetary Union; co-opetitive games; macroeconomic policy; bargaining solutions
Summary/Abstract: The crisis within the euro area has become frequent during 2010. First, it was the Greek economy that faced a default problem of its sovereign debt; in November, it was Ireland that has been in a serious financial situation at the verge of collapse causing difficulties to the euro. In this contribution, we focus on the Greek crisis and we suggest, through a model of co-opetition based on game theory and conceived at a macro level, feasible solutions in a cooperative perspective for the divergent interests which drive the economic policies in Germany and Greece, with the aim of improving the position of Greece, Germany and the whole euro area, also making a contribution to expand the set of macroeconomic policy tools. By means of our general analytical framework of co￾opetition, we show the strategies that could generate feasible solutions in a cooperative perspective for Germany and Greece, where these feasible solutions aim at offering a win-win outcome for both countries, letting them share the pie fairly within a growth path represented by a non-zero sum game.A remarkable analytical result of our work consists in the determination of the win-win solution by a new selection method on the transferable utility Pareto boundary of the co-opetitive game.

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