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The Elusive Gains from Nationally Oriented Monetary Policy

Author

Listed:
  • Martin Bodenstein
  • Giancarlo Corsetti
  • Luca Guerrieri

Abstract

The gains from monetary policy cooperation depend on real and financial distortions in the economy and evolve dynamically with prevailing economic conditions. We show that, with international trade in assets, these gains are driven by asymmetric cross-border developments in productivity and savings, and can reach multiples of the cost of economic fluctuations. When financial flows are restricted to nonstate-contingent bonds, the gains from cooperation grow with the size of global imbalances, i.e. net-foreign-asset positions.

Suggested Citation

  • Martin Bodenstein & Giancarlo Corsetti & Luca Guerrieri, 2025. "The Elusive Gains from Nationally Oriented Monetary Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(2), pages 873-908.
    • Handle: RePEc:oup:restud:v:92:y:2025:i:2:p:873-908.
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    File URL: http://hdl.handle.net/10.1093/restud/rdae046
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