Resource title

Competing coalitions in international monetary policy games

Resource image

image for OpenScout resource :: Competing coalitions in international monetary policy games

Resource description

In Kohler (2002) we analyse coalition formation in monetary policy coordination games between n countries. We find that positive spillovers of the coalition formation process and the resulting free-rider problem limit the stable coalition size: since the coalition members are bound by the union?s discipline, an outsider can successfully export inflation without fearing that the insiders will try to do the same. In this paper, based on the same model, we allow countries to join competing coalitions. The formation of a large currency bloc is not sustainable since it would impose too much discipline on all participants. However, the co-existence of several smaller currency blocs may be a second-best solution to the free-riding problem of monetary policy coordination.

Resource author

Marion Kohler

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19230

Resource license

Adapt according to the presented license agreement and reference the original author.