Do We Really Need a New International Monetary Compact?

40 Pages Posted: 25 Aug 2000 Last revised: 18 Oct 2010

See all articles by Maurice Obstfeld

Maurice Obstfeld

University of California, Berkeley; Peterson Institute for International Economics; National Bureau of Economic Research; Centre for Economic Policy Research

Kenneth Rogoff

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2000

Abstract

In recent years, many countries have instituted monetary reforms aimed at improving anti-inflation credibility. Is it a problem, however, that international welfare spillover effects seldom receive much consideration in the design of monetary reforms? Surprisingly, the answer may be no. Under plausible conditions, as domestic rules improve and international financial markets become more complete, the Nash and cooperative monetary rule setting games converge. We base our analysis on a utility-theoretic sticky-wage (new open economy macroeconomics) model; the question we pose simply could not have been adequately formulated using earlier models of monetary cooperation.

Suggested Citation

Obstfeld, Maurice and Rogoff, Kenneth S., Do We Really Need a New International Monetary Compact? (August 2000). NBER Working Paper No. w7864. Available at SSRN: https://ssrn.com/abstract=240058

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Kenneth S. Rogoff

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