A Simple Approach to International Monetary Policy Coordination

33 Pages Posted: 24 Jun 1998

See all articles by Pierpaolo Benigno

Pierpaolo Benigno

Luiss Guido Carli University; Einaudi Institute for Economics and Finance (EIEF)

Date Written: June 20, 1998

Abstract

This paper analyzes the strategic interaction between the monetary policies of two countries, in an intertemporal general equilibrium model with nominal rigidities and imperfect competition. It offers an excursus on non-cooperative towards cooperative solutions. All the results can be read by comparing the strength of the two biases: the monopolistic distortions and the terms of trade externalities. In the best feasible allocation, the larger country retains some monopolistic distortions while the smaller country reaches the competitive level.

JEL Classification: E42, F41, F42

Suggested Citation

Benigno, Pierpaolo, A Simple Approach to International Monetary Policy Coordination (June 20, 1998). Available at SSRN: https://ssrn.com/abstract=101328 or http://dx.doi.org/10.2139/ssrn.101328

Pierpaolo Benigno (Contact Author)

Luiss Guido Carli University

Viale Romania 32
Rome, Roma 00197
Italy

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

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