International Monetary Policy Coordination Under Asymmetric Shocks.

This paper analyzes whether international monetary policy coordination is the best response to economic interdependence. The paper develops a macroeconomic model in which countries show different preferences regarding objectives when faced with asymmetric disturbances and analyzes in strategic terms how monetary policy can deal with real, monetary, and supply-side shocks. It further shows how the desirability of monetary policy coordination depends on the presence of asymmetric shocks and also on the nature of disturbances, the channel of transmission, and the asymmetry of preferences. Finally, the paper derives the conditions under which monetary policy coordination proves to be desirable. (JEL E52, E61 , F42) Int'l Advances in Econ. Res., 10(1): pp. 72-82, Feb. 04. [ABSTRACT FROM AUTHOR]