Do We Really Need a New International Monetary Compact?

Maurice Obstfeld and Kenneth S Rogoff

No 7864, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In recent years, many countries have instituted monetary reforms aimed at improving anti-inflation credibility. Is it a problem, however, that international welfare spillover effects seldom receive much consideration in the design of monetary reforms? Surprisingly, the answer may be no. Under plausible conditions, as domestic rules improve and international financial markets become more complete, the Nash and cooperative monetary rule setting games converge. We base our analysis on a utility-theoretic sticky-wage (new open economy macroeconomics) model; the question we pose simply could not have been adequately formulated using earlier models of monetary cooperation.

JEL-codes: E42 F41 (search for similar items in EconPapers)
Date: 2000-08
Note: IFM ME
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