In this paper, I examine the international welfare effects of monetary policy. I develop a New Keynesian two …-country model, where central banks in both countries follow the Taylor rule. I show that a decrease in the domestic interest rate …, under producer currency pricing, is a beggar-thyself policy that reduces domestic welfare and increases foreign welfare in …

(1995) show that monetary expansion under producer currency pricing increases domestic and foreign overall welfare, in cases … beggar-thyself policy that reduces domestic welfare and increases foreign welfare (Corsetti & Pesenti 2001; Tille 2001). In …

standard Taylor rule. In this case, sign reversals do not occur even for very long durations of pegged nominal interest rates. …