FRANKEL, JA and ROCKETT, KE (1988) 'INTERNATIONAL MACROECONOMIC POLICY COORDINATION WHEN POLICYMAKERS DO NOT AGREE ON THE TRUE MODEL.' AMERICAN ECONOMIC REVIEW, 78 (3). pp. 318-340. ISSN 0002-8282

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Abstract

The authors relax the assumption of the literature on international coordination that policymakers know the true model. T wo countries will still be able to agree on a cooperative policy pack age that each believes will improve the objective function relative t o the Nash noncooperative solution. However, the bargaining solution may move the target variables in the wrong direction. These points ar e illustrated with monetary and fiscal multipliers taken from simulat ions of ten leading econometric models. Out of 1,000 possible combina tions of models that could represent U.S. beliefs, non-U.S. beliefs, and the true model, monetary coordination improves U.S. welfare in on ly 546 cases. Copyright 1988 by American Economic Association.

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of
SWORD Depositor:	Elements
Depositing User:	Elements
Date Deposited:	12 Jul 2012 11:43
Last Modified:	15 Jan 2022 00:48
URI:	http://repository.essex.ac.uk/id/eprint/2843

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