<p>This study presents a dynamic framework based on cooperative differential games to analyze the strategic interaction between the government and the central bank in achieving public debt sustainability. The main innovation of the model lies in explicitly separating two fiscal policy instruments—tax revenue and government spending—as independent control variables, replacing traditional models that rely on an aggregate budget deficit.The initial model is formulated as an open-loop cooperative game under the assumptions of equal weighting and symmetric bargaining power, examining two distinct approaches to the interaction of the government’s fiscal variables: (1) independence of tax revenue and government spending controls, and (2) dependence of these variables represented through the government’s budget deficit. Numerical results indicate that in the dependent control scenario—framed as a budget deficit—there is a significant reduction in money issuance, budget deficit, and public debt.The model is then extended to closed-loop (feedback) strategies to incorporate dynamic policymaker decisions responding to the debt level. The results demonstrate that closed-loop strategies, by accounting for policy feedback, are more effective than open-loop strategies in reducing the rate of money issuance, public debt, and budget deficit.Besides the cooperative framework, a theoretical non-cooperative model is also developed for comparison, highlighting differences in strategic interactions between policymakers. Sensitivity analysis further emphasizes that balancing policy objectives and adjusting institutional parameters play a crucial role in enhancing results.The findings highlight the importance of strategic coordination between the government and the central bank for financial sustainability and economic stability, provided that the individual rationality condition holds for each player.</p>