Policy Instrument Choice and Non-Coordinated Monetary Policy in Interdependent Economics

Giovanni Lombardo; Alan  Sutherland

doi:10.1016/j.jimonfin.2006.07.006

Policy Instrument Choice and Non-Coordinated Monetary Policy in Interdependent Economics

Research output: Contribution to journal › Article › peer-review

Abstract

Non-coordinated monetary policy is analyzed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal interest rate rules. In general, the non-coordinated equilibrium differs between the two types of policy rule, but a number of special cases are identified where the equilibria are identical. The endogenous choice of policy instrument is analyzed and the Nash equilibrium in the choice of policy instrument is shown to depend on the interest elasticity of money demand. (c) 2006 Elsevier Ltd. All rights reserved.

Original language	English
Pages (from-to)	855-873
Number of pages	19
Journal	Journal of International Money and Finance
Volume	25
Issue number	6
DOIs	https://doi.org/10.1016/j.jimonfin.2006.07.006
Publication status	Published - Oct 2006

Keywords

monetary policy
money supply rules
interest rate rules
STABILITY
WELFARE

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10.1016/j.jimonfin.2006.07.006

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title = "Policy Instrument Choice and Non-Coordinated Monetary Policy in Interdependent Economics",

abstract = "Non-coordinated monetary policy is analyzed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal interest rate rules. In general, the non-coordinated equilibrium differs between the two types of policy rule, but a number of special cases are identified where the equilibria are identical. The endogenous choice of policy instrument is analyzed and the Nash equilibrium in the choice of policy instrument is shown to depend on the interest elasticity of money demand. (c) 2006 Elsevier Ltd. All rights reserved.",

keywords = "monetary policy, money supply rules, interest rate rules, STABILITY, WELFARE",

author = "Giovanni Lombardo and Alan Sutherland",

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doi = "10.1016/j.jimonfin.2006.07.006",

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T1 - Policy Instrument Choice and Non-Coordinated Monetary Policy in Interdependent Economics

AU - Lombardo, Giovanni

AU - Sutherland, Alan

PY - 2006/10

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N2 - Non-coordinated monetary policy is analyzed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal interest rate rules. In general, the non-coordinated equilibrium differs between the two types of policy rule, but a number of special cases are identified where the equilibria are identical. The endogenous choice of policy instrument is analyzed and the Nash equilibrium in the choice of policy instrument is shown to depend on the interest elasticity of money demand. (c) 2006 Elsevier Ltd. All rights reserved.

AB - Non-coordinated monetary policy is analyzed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal interest rate rules. In general, the non-coordinated equilibrium differs between the two types of policy rule, but a number of special cases are identified where the equilibria are identical. The endogenous choice of policy instrument is analyzed and the Nash equilibrium in the choice of policy instrument is shown to depend on the interest elasticity of money demand. (c) 2006 Elsevier Ltd. All rights reserved.

KW - monetary policy

KW - money supply rules

KW - interest rate rules

KW - STABILITY

KW - WELFARE

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DO - 10.1016/j.jimonfin.2006.07.006

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SN - 0261-5606

VL - 25

SP - 855

EP - 873

JO - Journal of International Money and Finance

JF - Journal of International Money and Finance

IS - 6

ER -

Policy Instrument Choice and Non-Coordinated Monetary Policy in Interdependent Economics

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Keywords

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