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Paper SIER game (grade: 8)
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This is the paper for the SIER game, for which our group got an 8.
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SIER gameGiants
, Chapter 1: Introduction
In this paper we are going to describe our experience playing the SIER game. We were
assigned Country 5 and, in this report, we will show the policies that we chose during the
rounds of the game. We will also give explanations about those and their consequences.
Before the game began, we had a brainstorming session to decide how we would have
started to play. We chose to adopt an expansionary monetary policy strategy as we thought it
would have been the better way to improve the wealth of our country. This can be achieved
through an increased purchase of national bonds by the Central Bank, indeed this leads to a
lower supply of bonds but higher money supply. We thought that this would have been
helpful for our economy because a higher money supply drives a lower interest rate. Also, the
national debt, which was positive at the start of the game, would grow slower. It also has a
positive effect on the investments; indeed a low interest means lower capital cost because
interests on the loans are cheaper, and firms would invest more and they would also obtain a
higher gross profit (Gross profit = price x production – wage bill – capital costs).
Before the game, we also thought about how the other groups would have acted
during the game, so we predicted that they would have chosen to devalue their currency in
the first period. Therefore, we decided to levy that policy for prevention, despite it having
effects that contrast the increase of money supply. In fact, a devaluation leads to a higher
interest rate, while an expansion of the money supply does the opposite, as said before.
We selected this policy because we were worried about becoming the country with the
highest currency. Indeed if all the countries devalue their currency, ours would become more
expensive, which leads to a negative balance of payment that would worsen our deficit, and
also lead to deflation (which is a factor that influences political support). In the following
chapters we will describe each period that we played.
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