Can International Monetary Policy Coordination Improve Welfare Under Conditions of Zero Lower Bound?

I explore international monetary policy coordination and its welfare effects under a two-country macroeconomic model with the Zero Lower Bound (ZLB) on nominal interest rates in a floating exchange rate regime. Under the model, I find that monetary policy coordination does not improve total welfare for the model countries. When the ZLB exists in both countries, each country’s monetary policy becomes powerless in adjusting output gaps and the inflation rates. I also find that when the ZLB exists in one country or in all countries, each country’s outcomes in pursuing its own welfare may be better than the outcomes of monetary policy coordination