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Game theory model for European government bonds market stabilization: a saving-State proposal

Author

Listed:
  • Carfì, David
  • Musolino, Francesco
Abstract
The aim of this paper is to present a proposal regarding the possible stabilization of the rapid variations on the value of government bonds issued by the States, using the ``Game Theory". In particular, we focus our attention on three players: a large bank that has immediate access to the market of government bonds (hereinafter called Speculator, our first player), the European Central Bank (ECB, the second player) and the State in economic difficulty (our third player). We propose on financial transactions the introduction of a tax (cashed directly by the State in economic difficulty), which hits only the speculative profits. We show that the above tax would probably be able to avert the speculation, and, even in case of speculation on its government bonds, the State manages to pull itself out of the crisis. Finally, we also propose a cooperative solution that enables all economic actors involved (the Speculator, the ECB and the State) to obtain a profit.

Suggested Citation

  • Carfì, David & Musolino, Francesco, 2012. "Game theory model for European government bonds market stabilization: a saving-State proposal," MPRA Paper 39742, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39742
    as

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    File URL: https://mpra.ub.uni-muenchen.de/39742/1/MPRA_paper_39742.pdf
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    References listed on IDEAS

    as
    1. Carfì, David & Musolino, Francesco, 2011. "Game complete analysis for financial markets stabilization," MPRA Paper 34901, University Library of Munich, Germany.
    2. Carfì, David & Musolino, Francesco, 2012. "A coopetitive approach to financial markets stabilization and risk management," MPRA Paper 37098, University Library of Munich, Germany.
    3. David Carfì & Francesco Musolino, 2011. "Fair Redistribution In Financial Markets A Game Theory Complete Analysis," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 2(2), pages 74-100.
    4. Carfì, David, 2009. "Differentiable game complete analysis for tourism firm decisions," MPRA Paper 29193, University Library of Munich, Germany.
    5. repec:srs:journl:jasf:v:2:y:2011:i:2:p:74-100 is not listed on IDEAS
    6. Carfì, David & Musolino, Francesco, 2012. "Game theory and speculation on government bonds," Economic Modelling, Elsevier, vol. 29(6), pages 2417-2426.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alicia Vidler & Toby Walsh, 2024. "Non cooperative Liquidity Games and their application to bond market trading," Papers 2405.02865, arXiv.org.
    2. Musolino, Francesco & Carfì, David, 2012. "A game theory model for currency markets stabilization," MPRA Paper 39240, University Library of Munich, Germany.
    3. Carfì, David & Musolino, Francesco, 2012. "Game theory and speculation on government bonds," Economic Modelling, Elsevier, vol. 29(6), pages 2417-2426.

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    More about this item

    Keywords

    Game theory; Government bonds; European Central Bank; Spread; Tax; Speculation;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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