A Simple Approach to International Monetary Policy Coordination
Pierpaolo Benigno
Leonard N. Stern School of Business - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
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 Classifications: E42, F41, F42
Working Paper Series
Suggested Citation
Benigno, Pierpaolo, A Simple Approach to International Monetary Policy Coordination (June 20, 1998). Available at SSRN: http://ssrn.com/abstract=101328 or doi:10.2139/ssrn.101328
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