Do the ECB and the fed really need to cooperate? Optimal monetary policy in a two-country world

• 成果类型: Article
• 署名作者: Pappa, E
• 署名单位: University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2003.06.006
• 发表日期: 2004
• 页码: 753-779
• 关键词: international policy arrangements; Terms of trade; openness; international demand elasticity; intertemporal demand elasticity; optimal monetary policy

摘要

A two-country model with monopolistic competition and price stickiness is employed to investigate the implications for macroeconomic stability and the welfare properties of three international policy arrangements: (a) cooperative, (b) non-cooperative and (c) monetary union. I characterize the conditions under which there is scope for policy cooperation and quantify the costs of non-cooperation and monetary union. The non-cooperative equilibrium may be suboptimal because of terms of trade spillover effects, while monetary union may be suboptimal because of the Sluggishness of relative prices. Both the costs of policy competition and of a monetary union are sensitive to the values assumed for the intertemporal and international demand elasticity and the degree of openness of the economy. Independently of the calibration scenario adopted, the ECB has little to gain by coordinating with the Fed. (C) 2004 Elsevier B.V. All rights reserved.