On the Sustainability of International Coordination
The motivation of this paper rests on the attempts by some groups of countries to coordinate their macroeconomic policies. Implicit in these attempts is the notion that coordination by at least some countries is better than zero coordination. The authors use a dynamic general equilibrium model of international coordination to study the properties of a partial coordination scheme. They find that, indeed, some coordination is Pareto superior to zero coordination. Although a free-riding incentive problem arises in partial coordination schemes, such schemes are sustainable provided the relative size of the coalition is chosen 'appropriately.' Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Volume (Year): 35 (1994)
Issue (Month): 2 (May)
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