Uncertainty analysis in the IS-LM model
Document typeConference lecture
Rights accessOpen Access
We introduce a model for uncertainty in the IS-LM linear macroeconomic model with exogenous parameters. An uncertainty profile u is a short and macroscopic description of an stressed situation. We use u to define a strategic game where two agents, the angel and the daemon, act selfishly and have different goals. Those Nash equilibria provide the stable strategies in stressed situations, giving a natural estimation of risk. We apply this analysis to a linear version of the ISLM model and analyse the structure of the Nash equilibria in some particular games.
CitationGabarro, J., Serna, M. Uncertainty analysis in the IS-LM model. A: "Current topics on risk analysis: ICRA6 and risk 2015 conference". 2015, p. 329-337.