Implementing international monetary cooperation through inflation targeting

Gianluca Benigno and Pierpaolo Benigno

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper presents a two-country dynamic general equilibrium model with imperfect competition and nominal price rigidities in which productivity shocks coexist with markup shocks. After analyzing the features of the optimal cooperative solution, we show that this allocation can be implemented in a strategic context through inflation-targeting regimes. Under these regimes, each monetary authority minimizes a quadratic loss function that targets only domestic targets, namely, GDP inflation and the output gap.

Keywords: international monetary cooperation; inflation targeting (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (11)

Published in Macroeconomic Dynamics, 2008, 12(s1), pp. 45-59. ISSN: 1365-1005

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http://eprints.lse.ac.uk/35633/ Open access version. (application/pdf)

Related works:
Journal Article: IMPLEMENTING INTERNATIONAL MONETARY COOPERATION THROUGH INFLATION TARGETING (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:35633

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