International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model
Abstract
The authors relax the assumption of the literature on international coordination that policymakers know the true model. T wo countries will still be able to agree on a cooperative policy pack age that each believes will improve the objective function relative t o the Nash noncooperative solution. However, the bargaining solution may move the target variables in the wrong direction. These points ar e illustrated with monetary and fiscal multipliers taken from simulat ions of ten leading econometric models. Out of 1,000 possible combina tions of models that could represent U.S. beliefs, non-U.S. beliefs, and the true model, monetary coordination improves U.S. welfare in on ly 546 cases. Copyright 1988 by American Economic Association.Download Info
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Bibliographic Info
Article provided by American Economic Association in its journal American Economic Review.
Volume (Year): 78 (1988)
Issue (Month): 3 (June)
Pages: 318-40
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Handle: RePEc:aea:aecrev:v:78:y:1988:i:3:p:318-40
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For corrections or technical questions regarding this item, or to correct its listing, contact: (Jane Voros) or (Michael P. Albert).
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