International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model.
The authors relax the assumption of the literature on international coordination that policymakers know the true model. T wo countries will still be able to agree on a cooperative policy pack age that each believes will improve the objective function relative t o the Nash noncooperative solution. However, the bargaining solution may move the target variables in the wrong direction. These points ar e illustrated with monetary and fiscal multipliers taken from simulat ions of ten leading econometric models. Out of 1,000 possible combina tions of models that could represent U.S. beliefs, non-U.S. beliefs, and the true model, monetary coordination improves U.S. welfare in on ly 546 cases. Copyright 1988 by American Economic Association.
Year of publication: |
1988
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Authors: | Frankel, Jeffrey A ; Rockett, Katharine E |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 78.1988, 3, p. 318-40
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Publisher: |
American Economic Association - AEA |
Saved in:
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