Policy Decentralisation and Exchange Rate Management in Interdependent Economies

Willem Buiter and Jonathan Eaton

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: The demise of Bretton Woods and of the short-lived Smithsonian agreement has raised questions about exchange rate management by monetary authorities acting in isolation from one another. For instance, will individual monetary authorities have an incentive to stabilise the exchange rate? To what extent will monetary actions abroad disrupt domestic monetary policy? What are the gains from co-ordinating monetary policy? The problems that arise when different agents pursue independent policies in interdependent economies have been explored by a number of authors. Aoki (1976), Cooper (1969), Hamada (1976), Allen and Kenen (1980), McFadden (1967), Patrick (1973), Kydland (1976) and Pindyck (1976), among others, have made significant contributions. Different authors have focused on different aspects of decentralized policy formation. One purpose of this paper is to provide a general discussion of decentralization. A second purpose of this paper is to analyse the optimal design of monetary policy in interdependent economies

Pages: 36 pages
Date: 1980
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https://warwick.ac.uk/fac/soc/economics/research/w ... 78-1988/twerp172.pdf

Related works:
Working Paper: POLICY DECENTRALIZATION AND EXCHANGE RATE MANAGEMENT IN INTERDEPENDENT ECONOMIES (1980)
Working Paper: Policy Decentralization and Exchange Rate Management in Interdependent Economies (1980)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:172

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