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

  • Carrera, Jorge Eduardo

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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File URL: http://mpra.ub.uni-muenchen.de/7844/1/MPRA_paper_7844.pdf
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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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  1. Carlo Carraro & Francesco Giavazzi, 1988. "Can International Policy Coordination Really Be Counterproductive?," NBER Working Papers 2669, National Bureau of Economic Research, Inc.
  2. 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, vol. 14(3), pages 331-347, June.
  3. Jorge Braga de Macedo, 1985. "Small Countries in Monetary Unions: A Two-Tier Model," NBER Working Papers 1634, National Bureau of Economic Research, Inc.
  4. Matthew B. Canzoneri & Dale W. Henderson, 1991. "Monetary Policy in Interdependent Economies: A Game-Theoretic Approach," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031787, June.
  5. Feldstein, Martin, 1991. "Does one market require one money?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 77-84.
  6. Casella, Alessandra, 1992. "Participation in a Currency Union," American Economic Review, American Economic Association, vol. 82(4), pages 847-63, September.
  7. Laskar, Daniel, 1986. "International cooperation and exchange rate stabilization," Journal of International Economics, Elsevier, vol. 21(1-2), pages 151-164, August.
  8. Paul Krugman & Marcus Miller, 1992. "Exchange Rate Targets and Currency Bands," NBER Books, National Bureau of Economic Research, Inc, number krug92-1, October.
  9. Dolado, Juan J. & Griffiths, Mark & Padilla, Atilano Jorge, 1993. "Delegation in International Monetary Policy Games," CEPR Discussion Papers 761, C.E.P.R. Discussion Papers.
  10. Oudiz, Gilles, 1985. "European Policy Coordination: An Evaluation," CEPR Discussion Papers 81, C.E.P.R. Discussion Papers.
  11. Giavazzi, Francesco & Giovannini, Alberto, 1986. "Monetary Policy Interactions under Managed Exchange Rates," CEPR Discussion Papers 123, C.E.P.R. Discussion Papers.
  12. Klein, Martin, 1991. "Bargaining for the Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," CEPR Discussion Papers 553, C.E.P.R. Discussion Papers.
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