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Efectos precio y comercio en un area monetaria asimetrica
[Price and trade effects in an asymmetric monetary area]

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  • Carrera, Jorge Eduardo

Abstract

Using a three countries model with flexible exchange rates, this study tries to analyze the situation in an asymmetric monetary area around a big country. The model consider a stochastic framework where the monetary policy is used to stabilize the inflation and the current account. The monetary policy works through the exchange rate and the interdependence is a consequence of the exchange rates spillovers (trade and prices effects). The Nash equilibrium was obtained and based on this result it is showed under wich circumstances cooperation could improve the policymakers situation. The relation between spillovers specifyes the optimal monetary policy choice between coordination or Nash (to fix the exchange rates or not) and the viability of the coordination rule.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7844.

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Date of creation: 1995
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Handle: RePEc:pra:mprapa:7844

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Related research

Keywords: monetary unions; game theory; asimetry; exchange rates; Nash ; policy cooperation; three countries model;

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References

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  1. Cohen, Daniel & Wyplosz, Charles, 1995. "Price and trade effects of exchange rate fluctuations and the design of policy coordination," Journal of International Money and Finance, Elsevier, Elsevier, vol. 14(3), pages 331-347, June.
  2. Carraro, Carlo & Giavazzi, Francesco, 1988. "Can International Policy Coordination Really Be Counterproductive?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 258, C.E.P.R. Discussion Papers.
  3. Matthew B. Canzoneri & Dale W. Henderson, 1991. "Monetary Policy in Interdependent Economies: A Game-Theoretic Approach," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262031787, December.
  4. Laskar, Daniel, 1986. "International cooperation and exchange rate stabilization," Journal of International Economics, Elsevier, Elsevier, vol. 21(1-2), pages 151-164, August.
  5. Casella, Alessandra, 1990. "Participation in a Currency Union," CEPR Discussion Papers, C.E.P.R. Discussion Papers 395, C.E.P.R. Discussion Papers.
  6. Oudiz, Gilles, 1985. "European Policy Coordination: An Evaluation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 81, C.E.P.R. Discussion Papers.
  7. Dolado, Juan J. & Dolado, Juan J. & Griffiths, Mark & Padilla, A. Jorge & Padilla, A. Jorge, 1994. "Delegation in international monetary policy games," European Economic Review, Elsevier, Elsevier, vol. 38(5), pages 1057-1069, May.
  8. Jorge Braga de Macedo, 1985. "Small Countries in Monetary Unions: A Two-Tier Model," NBER Working Papers, National Bureau of Economic Research, Inc 1634, National Bureau of Economic Research, Inc.
  9. Klein, Martin, 1991. "Bargaining for the Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," CEPR Discussion Papers, C.E.P.R. Discussion Papers 553, C.E.P.R. Discussion Papers.
  10. Giavazzi, Francesco & Giovannini, Alberto, 1989. "Monetary Policy Interactions under Managed Exchange Rates," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 56(222), pages 199-213, May.
  11. Feldstein, Martin, 1991. "Does one market require one money?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 77-84.
  12. Paul Krugman & Marcus Miller, 1992. "Exchange Rate Targets and Currency Bands," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number krug92-1.
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Cited by:
  1. Bastourre, Diego & Carrera, Jorge & Féliz, Mariano & Panigo, Demian, 2003. "Dollarization and real volatility," CEPREMAP Working Papers (Couverture Orange), CEPREMAP 0311, CEPREMAP.
  2. Jorge Eduardo Carrera & Mariano Feliz & Demian Panigo & Marcelo Saavedra, 2001. "Dollarization as an Asymmetric Monetary Union. The Case of Argentina," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Gr 043, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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