The Elusive Gains from Nationally-Oriented Monetary Policy

Giancarlo Corsetti, Martin Bodenstein and Luca Guerrieri

No 14359, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The consensus in the recent literature is that the gains from international monetary cooperation are negligible, and so are the costs of a breakdown in cooperation. However, when assessed conditionally on empirically-relevant dynamic developments of the economy, the welfare cost of moving away from regimes of explicit or implicit cooperation may rise to multiple times the cost of economic fluctuations. In economies with incomplete markets, the incentives to act non-cooperatively are driven by the emergence of global imbalances, i.e., large net-foreign-asset positions; and, in economies with complete markets, by divergent real wages.

Keywords: Monetary policy cooperation; Global imbalances; Open-loop nash games (search for similar items in EconPapers)
JEL-codes: E44 E61 F42 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-ore
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Elusive Gains from Nationally Oriented Monetary Policy (2025)
Working Paper: The Elusive Gains from Nationally-Oriented Monetary Policy (2020)
Working Paper: The Elusive Gains from Nationally-Oriented Monetary Policy (2020)
Working Paper: The Elusive Gains from Nationally-Oriented Monetary Policy (2020)
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