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International coordination of macroeconomic policies: still alive in the new millennium?

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Author Info
Laurence H. Meyer
Brian M. Doyle
Joseph E. Gagnon
Dale W. Henderson

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Abstract

In this paper we provide two building blocks for an analysis of international policy coordination: (1) a survey of models of policy coordination, and (2) an account of experience with policy coordination among the G-7 countries and within Europe since the breakdown of the Bretton Woods System. Using these building blocks, we investigate the correspondence between the models and experience and attempt to draw lessons for both the modelers and the practitioners. We find that the correspondence is close enough that the models help in analyzing several instances of actual policy coordination, but that the correspondence could be even closer. As for lessons for modelers, we suggest that they devote more attention to the analysis of information exchange, a key feature of practical policy coordination; to the coordination of different types of policies; to the ramifications of political divisions within countries; and to the implications of market irrationality and speculative bubbles. As for lessons for policy makers, we suggest that they give more consideration to the choice of their ultimate objectives, in particular to whether the current account should always be close to balance; to achieving better internal policies; and to the greater use of fiscal policy as a stabilization tool.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 723.

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Date of creation: 2002
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Related research
Keywords: Macroeconomics ; International economic integration;

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  1. Tabellini, Guido, 1988. "Domestic Politics and the International Coordination of Fiscal Policies," CEPR Discussion Papers 226, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Maurice Obstfeld and Kenneth Rogoff., 2001. "Global Implications of Self-Oriented National Monetary Rules," Center for International and Development Economics Research (CIDER) Working Papers C01-120, University of California at Berkeley. [Downloadable!]
    Other versions:
  3. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November. [Downloadable!] (restricted)
  4. Currie, David & Levine, Paul & Pearlman, Joseph, 1996. "The Choice of 'Conservative' Bankers in Open Economies: Monetary Regime Options for Europe," Economic Journal, Royal Economic Society, vol. 106(435), pages 345-58, March. [Downloadable!] (restricted)
  5. Currie, David & Levine, Paul L & Pearlman, Joseph, 1995. "Can Delegation be Counterproductive? The Choice of 'Conservative' Bankers in Open Economies," CEPR Discussion Papers 1148, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Farrell, Joseph & Rabin, Matthew, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-18, Summer. [Downloadable!] (restricted)
  7. Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March. [Downloadable!] (restricted)
  8. Matthew B. Canzoneri & Hali J. Edison, 1990. "A new interpretation of the coordination problem and its empirical significance," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 399-435.
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  9. Alesina, Alberto & Tabellini, Guido, 1987. "Rules and Discretion with Noncoordinated Monetary and Fiscal Policies," Economic Inquiry, Oxford University Press, vol. 25(4), pages 619-30, October.
  10. Persson, Torsten & Tabellini, Guido, 1995. "Double-Edged Incentives: Institutions and Policy Coordination," CEPR Discussion Papers 1141, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Guglielmo Caporale & Michael Chui & Stephen Hall & Brian Henry, 2003. "Evaluating the Gains to Cooperation in the G-3," Empirica, Springer, vol. 30(4), pages 337-356, December. [Downloadable!] (restricted)
  12. Paul Levine & Joseph Pearlman, 2002. "Delegation and Fiscal Policy in the Open Economy: More Bad News for Rogoff's Delegation Game," Open Economies Review, Springer, vol. 13(2), pages 153-174, April. [Downloadable!] (restricted)
  13. Warwick McKibbin & Jeffrey D. Sachs, 1988. "Coordination of Monetary and Fiscal Policies in the Industrial Economies," NBER Chapters, in: International Aspects of Fiscal Policies, pages 73-120 National Bureau of Economic Research, Inc. [Downloadable!]
  14. Canzoneri, Matthew B & Minford, Patrick, 1987. "Policy Interdependence: Does Strategic Behaviour Pay? An Empirical Investigation Using the Liverpool World Model," CEPR Discussion Papers 201, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  15. McKibbin, Warwick & Sachs, Jeffrey, 1985. "Macroeconomic Policies in the OECD and LDC External Adjustment," CEPR Discussion Papers 56, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. 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.
  17. Feldstein, Martin S, 1988. "Distinguished Lecture on Economics in Government: Thinking about International Economic Coordination," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 3-13, Spring. [Downloadable!] (restricted)
  18. Feenstra, Robert C, 1992. "How Costly Is Protectionism?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 159-78, Summer. [Downloadable!] (restricted)
  19. Warwick J. McKibbin, 2002. "Macroeconomic Policy in Japan," Asian Economic Papers, MIT Press, vol. 1(2), pages 133-165. [Downloadable!] (restricted)
  20. Barry Eichengreen & Fabio Ghironi, 1999. "Macroeconomic Tradeoffs in the United States and Europe: Fiscal Distortions and the International Monetary Regime," Boston College Working Papers in Economics 467, Boston College Department of Economics. [Downloadable!]
  21. Hallett, A.J. Hughes, 1986. "International policy design and the sustainability of policy bargains," Journal of Economic Dynamics and Control, Elsevier, vol. 10(4), pages 467-494, December. [Downloadable!] (restricted)
  22. Willem H. Buiter & Richard C. Marston, 1985. "International Economic Policy Coordination," NBER Books, National Bureau of Economic Research, Inc, number buit85-1, September.
  23. Gilles Oudiz & Jeffrey Sachs, 1984. "Macroeconomic Policy Coordination among the Industrial Economies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(1984-1), pages 1-76. [Downloadable!]
  24. repec:cup:cbooks:9780521441964 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eichengreen, Barry & Taylor, Alan M, 2003. "The Monetary Consequences of A Free Trade Area of the Americas," CEPR Discussion Papers 3909, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Barry Eichengreen, 2008. "Should there be a coordinated response to the problem of global imbalances? Can there be one?," Working Papers 69, United Nations, Department of Economics and Social Affairs. [Downloadable!]
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