IDEAS home Printed from https://ideas.repec.org/a/kap/openec/v9y1998i1p417-446.html
   My bibliography  Save this article

The Choice of International Monetary Regimes in a Context of Repeated Games

Author

Listed:
  • Koichi Hamada

Abstract

A game theoretic and incentive approach is used to explain an international monetary regime. Decisions concerning a fixed exchange rate regime are difficult because they involve cooperation among participants, but decisions concerning defections from a fixed exchange rate regime are relatively easy because they are taken unilaterally. This may explain the difficulties for the completion of Economic and Monetary Union (EMU) in Europe well as the instability recently observed in the quasi-fixed exchange regimes of the Asian countries. EMU is now in full force. The perception of political benefits by national leaders has been the driving force of currency unification in Europe. The cost of a monetary union is the loss of monetary control by each participating nation. If countries cannot contain their desire to deviate from the common monetary expansion, then the currency could potentially be under speculative attack. After January 1, 1999, theoretically each EMU country can no longer deviate from the common norm; but the question remains how to implement this mode of conduct. Even the country in the center, Germany, may find a cost associated with the loss of its leadership role. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Koichi Hamada, 1998. "The Choice of International Monetary Regimes in a Context of Repeated Games," Open Economies Review, Springer, vol. 9(1), pages 417-446, January.
    • Handle: RePEc:kap:openec:v:9:y:1998:i:1:p:417-446
    DOI: 10.1023/A:1008396218591
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1008396218591
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1023/A:1008396218591?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bagwell, Kyle & Staiger, Robert W., 1997. "Multilateral tariff cooperation during the formation of customs unions," Journal of International Economics, Elsevier, vol. 42(1-2), pages 91-123, February.
    2. Hamada, K. & Goto, J., 1996. "Regional Economic Integration and Article XXIV of the GATT," Papers 754, Yale - Economic Growth Center.
    3. Barry Eichengreen, 1998. "Exchange Rate Stability and Financial Stability," Open Economies Review, Springer, vol. 9(1), pages 569-608, January.
    4. Boyer, Russell S, 1978. "Optimal Foreign Exchange Market Intervention," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1045-1055, December.
    5. Barry Eichengreen, 1992. "Is Europe an Optimum Currency Area?," Palgrave Macmillan Books, in: Silvio Borner & Herbert Grubel (ed.), The European Community after 1992, chapter 8, pages 138-161, Palgrave Macmillan.
    6. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    7. Frankel, Jeffrey A & Rockett, Katharine E, 1988. "International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model," American Economic Review, American Economic Association, vol. 78(3), pages 318-340, June.
    8. Krasner, Stephen D., 1982. "Structural causes and regime consequences: regimes as intervening variables," International Organization, Cambridge University Press, vol. 36(2), pages 185-205, April.
    9. Greif, Avner, 1991. "The Organization of Long-Distance Trade: Reputation and Coalitions in the Geniza Documents and Genoa During the Eleventh and Twelfth Centuries," The Journal of Economic History, Cambridge University Press, vol. 51(2), pages 459-462, June.
    10. Obstfeld, Maurice, 1997. "Destabilizing effects of exchange-rate escape clauses," Journal of International Economics, Elsevier, vol. 43(1-2), pages 61-77, August.
    11. Michele Fratianni & Andreas Hauskrecht & Aurelio Maccario, 1998. "Dominant Currencies and the Future of the Euro," Open Economies Review, Springer, vol. 9(1), pages 467-492, January.
    12. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    13. Junichi Goto & Koichi Hamada, 1996. "Regional Economic Integration and Article XXIV of the GATT," Discussion Paper Series 59, Research Institute for Economics & Business Administration, Kobe University.
    14. Forrest Capie, 1998. "Monetary Unions in Historical Perspective: What Future for the Euro in the International Financial System," Open Economies Review, Springer, vol. 9(1), pages 447-466, January.
    15. Matthew B. Canzoneri & Dale W. Henderson, 1991. "Monetary Policy in Interdependent Economies: A Game-Theoretic Approach," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031787, December.
    16. Mr. Michael G. Spencer & Mr. Peter M. Garber, 1992. "The Dissolution of the Austro-Hungarian Empire: Lessons for Currency Reform," IMF Working Papers 1992/066, International Monetary Fund.
    17. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(3), pages 427-460, July.
    18. Bagwell, Kyle & Staiger, Robert W, 1990. "A Theory of Managed Trade," American Economic Review, American Economic Association, vol. 80(4), pages 779-795, September.
    19. Eichengreen, B., 1992. "Should the Maastricht Treaty be Saved?," Princeton Studies in International Economics 74, International Economics Section, Departement of Economics Princeton University,.
    20. Mr. Joshua E. Greene & Mr. Peter Isard, 1991. "Currency Convertibility and the Transformation of Centrally Planned Economies," IMF Occasional Papers 1991/004, International Monetary Fund.
    21. Haas, Peter M., 1992. "Introduction: epistemic communities and international policy coordination," International Organization, Cambridge University Press, vol. 46(1), pages 1-35, January.
    22. Rudiger Dornbusch, 1992. "Monetary problems of post-communism: Lessons from the end of the Austro-Hungarian empire," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 128(3), pages 391-424, September.
    23. Matsushima, Hitoshi, 1989. "Efficiency in repeated games with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 48(2), pages 428-442, August.
    24. Cooper, Richard N., 1975. "Prolegomena to the choice of an international monetary system," International Organization, Cambridge University Press, vol. 29(1), pages 63-97, January.
    25. Richard Wagner, 1966. "Pressure groups and political entrepreneurs: A review article," Public Choice, Springer, vol. 1(1), pages 161-170, December.
    26. Mr. James M. Boughton, 1991. "The CFA Franc Zone: Currency Union and Monetary Standard," IMF Working Papers 1991/133, International Monetary Fund.
    27. Buiter, Willem H. & Corsetti, Giancarlo & Roubini, Nouriel, 1992. "`Excessive Deficits': Sense and Nonsense in the Treaty of Maastricht," CEPR Discussion Papers 750, C.E.P.R. Discussion Papers.
    28. Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michele Fratianni & Dominick Salvatore & Paolo Savona, 1998. "Ideas for the Future of the International Monetary System: Conclusions and Remarks," Open Economies Review, Springer, vol. 9(1), pages 689-700, January.
    2. Michele Fratianni & Andreas Hauskrecht & Aurelio Maccario, 1998. "Dominant Currencies and the Future of the Euro," Open Economies Review, Springer, vol. 9(1), pages 467-492, January.
    3. Michele Fratianni & Andreas Hauskrecht, 1998. "From the Gold Standard to a Bipolar Monetary System," Open Economies Review, Springer, vol. 9(1), pages 609-636, January.
    4. Forrest Capie, 1998. "Monetary Unions in Historical Perspective: What Future for the Euro in the International Financial System," Open Economies Review, Springer, vol. 9(1), pages 447-466, January.
    5. Dominick Salvatore, 1998. "International Monetary and Financial Arrangements: Present and Future," Open Economies Review, Springer, vol. 9(1), pages 375-416, January.
    6. Jiang, Xue & Li, Sai-Ping & Mai, Yong & Tian, Tao, 2022. "Study of multinational currency co-movement and exchange rate stability base on network game," Finance Research Letters, Elsevier, vol. 47(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominick Salvatore, 1998. "International Monetary and Financial Arrangements: Present and Future," Open Economies Review, Springer, vol. 9(1), pages 375-416, January.
    2. Lars Jonung & Eoin Drea, 2010. "It Can't Happen, It's a Bad Idea, It Won't Last: U.S. Economists on the EMU and the Euro, 1989–2002," Econ Journal Watch, Econ Journal Watch, vol. 7(1), pages 1-4–52, January.
    3. Yiyong Cai & Warwick McKibbin, 2015. "Uncertainty and International Climate Change Negotiations," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(1), pages 101-115, March.
    4. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551, Elsevier.
    5. Thomas Willett, 1999. "Developments in the Political Economy of Policy Coordination," Open Economies Review, Springer, vol. 10(2), pages 221-253, May.
    6. Arie Krampf, 2012. "The Consolidation of the Anglo-Saxon/European Consensus on Price Stability - From International Coordination to a Rule-Based Monetary Regime," KFG Working Papers p0047, Free University Berlin.
    7. Kleczka, Mitja, 2015. "Monetary Policy, Fiscal Policy, and Secular Stagnation at the Zero Lower Bound. A View on the Eurozone," MPRA Paper 67228, University Library of Munich, Germany.
    8. Frankel, Jeffrey A. & Rose, Andrew K., 1996. "Economic Structure and the Decision to Adopt a Common Currency," Center for International and Development Economics Research (CIDER) Working Papers 233436, University of California-Berkeley, Department of Economics.
    9. Alban Mathieu, 2021. "Frankel and Rose’s Introduction to the Endogeneity of Optimality: A Model Limited to the European Monetary Experience," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 299-314, July.
    10. Paolo Pasimeni, 2014. "An Optimum Currency Crisis," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(2), pages 173-204, December.
    11. Mareike Kleine, 2013. "Knowing your limits: Informal governance and judgment in the EU," The Review of International Organizations, Springer, vol. 8(2), pages 245-264, June.
    12. Forrest Capie, 1998. "Monetary Unions in Historical Perspective: What Future for the Euro in the International Financial System," Open Economies Review, Springer, vol. 9(1), pages 447-466, January.
    13. Kawai, Masahiro, 2015. "International Spillovers of Monetary Policy: US Federal Reserve's Quantitative Easing and Bank of Japan's Quantitative and Qualitative Easing," ADBI Working Papers 512, Asian Development Bank Institute.
    14. Charles Wyplosz, 1997. "EMU: Why and How It Might Happen," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 3-21, Fall.
    15. Paolo Savona & Aurelio Maccario, 1998. "On the Relation between Money and Derivatives and its Application to the International Monetary Market," Open Economies Review, Springer, vol. 9(1), pages 637-664, January.
    16. Michele Fratianni & Dominick Salvatore & Paolo Savona, 1998. "Ideas for the Future of the International Monetary System: Conclusions and Remarks," Open Economies Review, Springer, vol. 9(1), pages 689-700, January.
    17. Handler, Heinz, 2013. "The eurozone: piecemeal approach to an optimum currency area," MPRA Paper 67183, University Library of Munich, Germany.
    18. Parviainen, Seija, 1998. "Redistribution and Risk Sharing in EMU," Discussion Papers 159, VATT Institute for Economic Research.
    19. Peter Mooslechner & Martin Schuerz, 1999. "International Macroeconomic Policy Coordination: Any Lessons for EMU? A Selective Survey of the Literature," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(3), pages 171-199, September.
    20. Chris Kirrane, 2018. "Lessons from the History of European EMU," Papers 1805.12112, arXiv.org.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:9:y:1998:i:1:p:417-446. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.