International Monetary Policy Coordination and Financial Market Integration

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.

• Publication year

  2002

• Venue

  Social Science Research Network

• Publication date

  2002-09-01

• Fields of study

  Business, Economics

• Identifiers
  DOI 10.17016/IFDP.2002.751
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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