When Do Times of Increasing Uncertainty Call for Centralized Harmonization in International Policy Coordination?

Andrzej Baniak and Peter Grajzl

Emerging Markets Finance and Trade, 2014, vol. 50, issue 4, 128-144

Abstract: Under what conditions do times of increasing uncertainty, such as the ongoing global turmoil, call for international policy harmonization? We shed light on this question by developing a model of interjurisdictional policy coordination taking place under incomplete information and featuring uncertainty about jurisdictions' politico-economic fundamentals. We show how the effect of an increase in uncertainty on the desirability of policy harmonization varies with the pattern of asymmetries in jurisdictions' scale, mutual influence, and magnitude of the increase in uncertainty. Our analysis suggests that the case for policy harmonization as a governance response to growing uncertainty is not compelling.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:50:y:2014:i:4:p:128-144

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DOI: 10.2753/REE1540-496X500408

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