IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/2669.html
   My bibliography  Save this paper

Can International Policy Coordination Really Be Counterproductive?

Author

Listed:
  • Carlo Carraro
  • Francesco Giavazzi

Abstract

This paper shows that international policy coordination is not counterproductive in a world where the incentive to run beggar-thy-neighbor policies internationally arises from the inefficiency that characterizes, within each country, the interaction between policymakers and private agents. The domestic inefficiency arises from the presence of nominal contracts that give central banks the power to affect real variables. In this setting we show that international cooperation belongs to central banks' dominant strategy. The paper is motivated by a common and misleading interpretation of a paper by Rogoff [1985], namely that international cooperation may be counterproductive in the presence of a domestic inefficiency.

Suggested Citation

  • Carlo Carraro & Francesco Giavazzi, 1988. "Can International Policy Coordination Really Be Counterproductive?," NBER Working Papers 2669, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2669
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w2669.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Canzoneri, Matthew B. & Henderson, Dale W., 1988. "Is sovereign policymaking bad?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 93-140, January.
    2. Rochet, Jean-Charles, 1987. "Some recent results in bargaining theory," European Economic Review, Elsevier, vol. 31(1-2), pages 326-335.
    3. Rogoff, Kenneth, 1985. "Can international monetary policy cooperation be counterproductive?," Journal of International Economics, Elsevier, vol. 18(3-4), pages 199-217, May.
    4. Giavazzi, Francesco & Giovannini, Alberto, 1986. "Monetary Policy Interactions under Managed Exchange Rates," CEPR Discussion Papers 123, C.E.P.R. Discussion Papers.
    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. Thomas Willett, 1999. "Developments in the Political Economy of Policy Coordination," Open Economies Review, Springer, vol. 10(2), pages 221-253, May.
    2. Carrera, Jorge Eduardo, 1995. "Efectos precio y comercio en un area monetaria asimetrica [Price and trade effects in an asymmetric monetary area]," MPRA Paper 7844, University Library of Munich, Germany.
    3. van der Ploeg, F, 1990. "Capital Accumulation, Inflation and Long-run Conflict in International Objectives," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 501-525, July.
    4. Carlo Carraro, 1997. "Modelling International Policy Games: Lessons from European Monetary Coordination," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 24(3), pages 163-177, October.

    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. Hubert Kempf & Leopold von Thadden, 2007. "On policy interactions among nations: when do cooperation and commitment matter ?," 2007 Meeting Papers 801, Society for Economic Dynamics.
    2. D'Amato, Marcello & Martina, Riccardo, 2005. "Credibility and commitment of monetary policy in open economies," European Journal of Political Economy, Elsevier, vol. 21(4), pages 872-902, December.
    3. Marco E. Terrones, 1991. "Macroeconomic policy and elections: Theories and challenges," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 6(2), pages 173-195.
    4. Jensen, Henrik, 1999. "Monetary policy cooperation and multiple equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 23(8), pages 1133-1153, August.
    5. Henrik Jensen, 1993. "International monetary policy cooperation in economies with centralized wage setting," Open Economies Review, Springer, vol. 4(3), pages 269-285, September.
    6. Assaf Razin & Efraim Sadka, 1991. "International Fiscal Policy Coordination and Competition: An Exposition," NBER Working Papers 3779, National Bureau of Economic Research, Inc.
    7. Patrick J. Kehoe, 1986. "International policy cooperation may be undesirable," Staff Report 103, Federal Reserve Bank of Minneapolis.
    8. Michael D. Bordo, 1993. "The gold standard, Bretton Woods and other monetary regimes: a historical appraisal," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 123-191.
    9. van der Ploeg, F., 1989. "Monetary interdependence under alternative exchange-rate regimes," Discussion Paper 1989-20, Tilburg University, Center for Economic Research.
    10. Banerjee, Gaurango, 2001. "Rules and discretion with common central bank and separate fiscal authorities," Journal of Economics and Business, Elsevier, vol. 53(1), pages 45-68.
    11. Jensen, Henrik, 2000. "Optimal monetary policy cooperation through state-independent contracts with targets," European Economic Review, Elsevier, vol. 44(3), pages 517-539, March.
    12. Jensen, Henrik, 1996. "The advantage of international fiscal cooperation under alternative monetary regimes," European Journal of Political Economy, Elsevier, vol. 12(3), pages 485-504, November.
    13. 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.
    14. Conconi, Paola & Perroni, Carlo, 2009. "Do credible domestic institutions promote credible international agreements?," Journal of International Economics, Elsevier, vol. 79(1), pages 160-170, September.
    15. Schatz, Klaus-Werner & Scheide, Joachim & Trapp, Peter, 1988. "Low growth and high unemployment in Europe - Causes and policy options," Kiel Discussion Papers 140, Kiel Institute for the World Economy (IfW Kiel).
    16. Nicola Acocella & Giovanni Bartolomeo, 2004. "Is a Conservative Central Banker a (Perfect) Substitute for Wage Coordination?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 281-294, June.
    17. Mostafa SALIMIFAR & Mohammad Javd RAZMI & Zahra TAGHIZADEGAN, 2015. "A survey of the effect of trade openness size on inflation rate in Iran using ARDL," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(604), A), pages 143-154, Autumn.
    18. van der Ploeg, F & de Zeeuw, A J, 1990. "Perfect Equilibrium in a Model of Competitive Arms Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 131-146, February.
    19. Mr. Roel M. W. J. Beetsma & Mr. Xavier Debrun & Mr. Franc Klaassen, 2001. "Is Fiscal Policy Coordination in EMU Desirable?," IMF Working Papers 2001/178, International Monetary Fund.
    20. Van Der Ploeg, F., 1991. "Unanticipated Inflation and Government Finance : The Case for an Independent Common Central Bank," Papers 9115, Tilburg - Center for Economic Research.

    More about this item

    Statistics

    Access and download statistics

    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:nbr:nberwo:2669. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    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.