Abstract
In a world of free trade and capital mobility, monetary policy is strongly interdependent across countries via international spillover effects on inflation and employment. These interdependencies create strategic interactions in policymaking. This chapter introduces some of the main ideas from the large literature on international monetary policy coordination which deals precisely with the strategic aspects of policymaking. This literature is extensively surveyed also in Canzoneri and Henderson (1991), Currie and Levine (1993), Ghosh and Masson (1994) and Persson and Tabellini (1995).
This is a slightly edited version of chapter 18 in our book, Political Economics: Explaining Economic Policy, MIT Press, 2000. We are grateful to MIT Press for granting us permission to reproduce it here.
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Persson, T., Tabellini, G. (2001). International Monetary Policy Coordination. In: Hallett, A.H., Mooslechner, P., Schuerz, M. (eds) Challenges for Economic Policy Coordination within European Monetary Union. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-4738-6_2
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