DP761 Delegation in International Monetary Policy Games

Author(s): Juan J. Dolado, Mark Griffiths, Atilano Jorge Padilla
Publication Date: February 1993
Keyword(s): Delegation, International Economy, Monetary Policy, Spillovers
JEL(s): E52, E58, F33
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=761

In this paper we show that the delegation of monetary policy to an independent and more conservative central banker is an optimal policy in an international context with monetary spillovers between countries, even in the absence of time inconsistency (credibility) issues. We also study the welfare implications of delegating monetary policy and extend our analysis to incorporate the coordination of monetary policies.