Fixed exchange rates and non-cooperative monetary policies
ISSN: 2255-5471
Año de publicación: 1987
Número: 14
Tipo: Documento de Trabajo
Otras publicaciones en: Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales
Resumen
This paper presents a model which in a world with fixed exchange rates and absence of capital controls non-cooperative game yield multiple Nash equilibria with nonoptimal allocations, when we introduce regimes as strategies for the players. In general there is a unique Perfect Equilibrium for the game with both strategies. The sub-optimality of the non-cooperative solution provides scope for international coordination, in the form of joint choice of non-inflationary polices that dominate the Nash equilibria allocations.