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Optimal monetary policies and policy interdependence in the world economy
The literature on strategic policy interactions has focused on the implications of alternative strategic policy interactions, cooperative versus noncooperative, for equilibrium macroeconomic policies given the state of the world economy. This paper asks how changes in world economic conditions alter equilibrium policies given the nature of policy interdependence among nations. The paper considers a world economy comprised of two countries operating under a system of flexible exchange rates. Both governments act noncooperatively and choose the rate of growth of their money supply so as to maximize the utility of their country's residents given the rate of growth of the other country's money supply. The resulting Nash equilibrium rates of growth of the home and foreign money supplies are determined and the dependence of international differences in money growth and inflation rates on international differences in technology. (JEL E52, E60, F41, F42). © 1993.
Duke Scholars
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Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1403 Econometrics
- 1402 Applied Economics
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![Journal cover image](https://secure.syndetics.com/index.aspx?isbn=/lc.gif&issn=0261-5606&client=dukeuniv)
Published In
DOI
ISSN
Publication Date
Volume
Issue
Start / End Page
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1403 Econometrics
- 1402 Applied Economics