Definition:
The Ramsey equilibrium is the results from a government's choice in certain kinds of models. Suppose that
the government knows how private sector producers will respond to any economic
environment, and that the government moves first, choosing some aspect of the
environment. Suppose further that the government makes its choice in order to
maximize a utility function for the population. Then the government's choice
is a Ramsey problem and its solution pays off with the Ramsey outcome.
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