Coopération monétaire partielle

The paper extends Rogoff's argument on counterproductive international monetary cooperation to the case of more than two countries and underlines that it can lead to an argument in favor of a partial monetary cooperation, i.e. between only a subset of countries. First, in a n-country model where each cooperative bloc contains the same number of countries, it is shown that partial cooperation realizes a trade-off between the cost of increased expected inflation and the gain of a better response to shocks. Second, in the three-country case, where the core is taken as the solution concept, it is also shown that "free riding" is being facilitated.