Monetary Cooperation during Global Inflation Surges

Luca Fornaro and Federica Romei

No 16971, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study optimal monetary policy during times of global scarcity of tradable goods. The optimal monetary response entails a surge in inflation, which helps rebalance production towards the tradable sector. While the inflation costs are fully bore domestically, however, the gains in terms of higher supply of tradable goods partly spill over to the rest of the world. National central banks may thus fall into a coordination trap, and implement an excessively tight monetary policy causing an unnecessarily sharp global contraction.

Keywords: Capital; inflows (search for similar items in EconPapers)
JEL-codes: E32 E44 E52 F41 F42 (search for similar items in EconPapers)
Date: 2022-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16971 (application/pdf)

Related works:
Working Paper: Monetary cooperation during global inflation surges (2024)
Working Paper: Monetary Cooperation during Global Inflation Surges (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:16971

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16971

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().