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International monetary policy coordination under asymmetric shocks

The purpose of this paper is to show whether international policy coordination may be the best response to economic interdependence. We will study the short-run interactions taking pla ce among interdependent economies, where monetary supply is the instrument used to maintain output and price targets. We develop a macroeconomic model in which countries show different preferences regarding objectives and face asymmetric disturbances, analyzing in strategic terms how nonetary policy can deal with real, monetary, adn supply shocks. We also show how the superiority of the cooperative solution depends on the sources of the disturbances, the underlying economic frameword, and the asymmetry of the preferences.

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Paper provided by Departamento de Economía - Universidad Pública de Navarra in its series Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra with number 0002.

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Length: 45 pages
Date of creation: 2000
Date of revision:
Publication status: Published in
Handle: RePEc:nav:ecupna:0002
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  1. Francesco Giavazzi & Marco Pagano, 1991. "The Advantage of Tying One's Hands: EMS Discipline and Central Bank Credibility," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 303-330 National Bureau of Economic Research, Inc.
  2. Beetsma, Roel M. W. J. & Lans Bovenberg, A., 1998. "Monetary union without fiscal coordination may discipline policymakers," Journal of International Economics, Elsevier, vol. 45(2), pages 239-258, August.
  3. Patrick J. Kehoe, 1986. "Coordination of fiscal policies in a world economy," Staff Report 98, Federal Reserve Bank of Minneapolis.
  4. 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(1), pages 1-76.
  5. Frankel, Jeffrey A & Rockett, Katharine E, 1988. "International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model," American Economic Review, American Economic Association, vol. 78(3), pages 318-40, June.
  6. Carmen Díaz-Roldan, 2004. "International monetary policy coordination under asymmetric shocks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 10(1), pages 72-82, February.
  7. David Currie & Paul Levine, 1985. "Macroeconomic Policy Design in an Interdependent World," NBER Chapters, in: International Economic Policy Coordination, pages 228-273 National Bureau of Economic Research, Inc.
  8. Reinhard Neck & Gottfried Haber & Warwick McKIBBIN, 1999. "Macroeconomic Policy Design in the European Monetary Union: A Numerical Game Approach," Empirica, Springer, vol. 26(4), pages 319-335, December.
  9. Helg, Rodolfo & Manasse, Paolo & Monacelli, Tommaso & Rovelli, Riccardo, 1995. "How much (a)symmetry in Europe? Evidence from industrial sectors," European Economic Review, Elsevier, vol. 39(5), pages 1017-1041, May.
  10. Corden, Warner Max, 1985. "Macroeconomic Policy Interaction under Flexible Exchange Rates: A Two-Country Model," Economica, London School of Economics and Political Science, vol. 52(205), pages 9-23, February.
  11. repec:ant:wpaper:1995012 is not listed on IDEAS
  12. Forni, Mario & Reichlin, Lucrezia, 2001. "Federal policies and local economies: Europe and the US," European Economic Review, Elsevier, vol. 45(1), pages 109-134, January.
  13. Hamada, Koichi, 1976. "A Strategic Analysis of Monetary Interdependence," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 677-700, August.
  14. Douven, R. & Plasmans, J., 1995. "Convergence and International Policy Coordination in the EU: A Dynamic Games Approach," Papers 9596, Tilburg - Center for Economic Research.
  15. Canzoneri, Matthew B, 1985. "Monetary Policy Games and the Role of Private Information," American Economic Review, American Economic Association, vol. 75(5), pages 1056-70, December.
  16. van Aarle, B. & Di Bartolomeo, G. & Engwerda, J.C. & Plasmans, J.E.J., 2002. "Monetary and fiscal policy design in the EMU : An overview," Other publications TiSEM bc75d00d-2309-49a5-ad54-3, Tilburg University, School of Economics and Management.
  17. Benigno, Pierpaolo, 2002. "A simple approach to international monetary policy coordination," Journal of International Economics, Elsevier, vol. 57(1), pages 177-196, June.
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