International monetary policy cooperation revisited: conservatism and non-atomistic wage setting

Vincenzo Cuciniello

Working Papers from Center for Fiscal Policy, Swiss Federal Institute of Technology Lausanne

Abstract: This paper presents a simple model of policy coordination in line with the New Open Economy Macroeconomics literature. I extent the analysis on non-cooperative toward cooperative solutions by incorporating a collective wage bargaining system and conservative central banks. It turns out that previous results on international monetary policy cooperation are modified such that cooperation is welfare improving. The finding in the model relies on wage setters’ perceptions about affecting monetary policy. It is shown that under cooperation wage setters perceive a tighter monetary policy, thereby inducing wage restraints.

Keywords: Monetary policy games; International policy coordination; Central bank conservatism; Monopoly unions (search for similar items in EconPapers)
JEL-codes: E58 F41 F42 J51 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2009-06
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:cif:wpaper:200905

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