The Choice of Monetary Instrument in Two Interdependent Economies Under Uncertainty

Stephen J Turnovsky and Vasco d'Orey

No 2604, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the choice of monetary instrument in a stochastic two country setting where each country's set of monetary policy instruments includes both the money supply and the interest rate. It shows how the optimal choice of instrument is determined In two stages. First, for each pair, the minimum welfare coat for each economy is determined This defines a par of payoff matrices and the second stage involves determining the Nash equilibrium for this bimatrix game. In our illustrative example for the alternative shocks considered, a dominant Nash equilibrium is always obtained.

Date: 1988-06
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Journal of Monetary Economics, Vol. 23, No. 1, pp. 121-133, (1989).

Downloads: (external link)
http://www.nber.org/papers/w2604.pdf (application/pdf)

Related works:
Journal Article: The choice of monetary instrument in two interdependent economies under uncertainty (1989)
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:nbr:nberwo:2604

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2604

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().