PRISONER DILEMMA BETWEEN POLICY MAKERS: EVIDENCE FROM TURKEY

Abstract

In this study, we present about the interaction between monetary and fiscal policy makers in the Turkish economy since the 2001 crisis. This interaction is evaluated by a theoretical perspective of the game. The data show that there is a conflict between the monetary and fiscal policy makers in the Turkish economy, especially in some periods. The coordination problem created by this conflict is affecting social welfare negatively. Therefore, we argue that during these periods, there is a state of "Prisoners' Dilemma" among policy makers.

Keywords

• monetary policy
• fiscal policy
• prisoners' dilemma