International Monetary Policy Coordination and Financial Market Integration

By Alan Sutherland. Social Science Research Network, 2002

115 citations recorded by the source corpus.

The welfare gains from international coordination of monetary policy are analysed in a two-country model with sticky prices. The gains from coordination are compared under two alternative structures for financial markets: financial autarky and risk sharing. The welfare gains from coordination are found to be largest when there is risk sharing and the elasticity of substitution between home and foreign goods is greater than unity. When there is no risk sharing the gains to coordination are almost zero. It is also shown that the welfare gain from risk sharing can be negative when monetary policy is uncoordinated.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/4e2dfc434a789c61f6d8ca0424baf993413bb278

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Citations in the corpus

A Simple Second-Order Solution Method For Dynamic General Equilibrium Models (2002, background): “It should be possible to extend 17In Sutherland (2002) the comparison between coordinated and Nash policy is considered in more detail in a static model.”
Price Stability in Open Economies (2003, background): “Steps in this direction have been taken by Sutherland (2002).”
The Need for International Policy Coordination: What's Old, What's New, What's Yet to Come? (2005, unknown): “See also Obstfeld and Rogoff (2002) and Sutherland (2002). processes generating productivity shocks in the two sectors are quite different.9 If we relax the assumption that productivity shocks are perfectly correlated, then the Nash solution no longer achieves the flexible price solution in the…”
Monetary policy and welfare in a small open economy (2009, result): “16This result is consistent with the findings of Sutherland (2004) who shows that gains from cooperation between two countries, which produce substitute goods, are larger when there is perfect risk sharing across such countries. quadratic loss function (2) subject to the linear constraints…”
Fiscal and Monetary Rules for a Currency Union (2009, background): “(56) The set of optimality conditions is then completed by the constraints [45]-[50].”
Optimal Monetary Policy in a Small Open Economy with Home Bias (2008, background): “Other contributions (such as Corsetti and Pesenti (2001), Sutherland (2002) and Benigno and Benigno (2003)) have shown that this terms of trade motive for optimal markup variability depends on the underlying speci cation of the utility function (e.g., it vanishes in the case of unitary…”