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Bloc Formation in International Monetary Policy Coordination

Author

Listed:
  • Kohler, M.

Abstract

In a standard framework of international monetary policy games we show that countries will prefer to split up into several coalition blocs of a smaller size rather than forming one big coalition. Depending on the strategic position between the coalitions in an equilibrium there will be either only coalitions of the same size or the 'leading' coalition will be smaller that the 'follower' coalition. A possible application of these results is the formation of currency blocs.

Suggested Citation

  • Kohler, M., 1997. "Bloc Formation in International Monetary Policy Coordination," Economics Working Papers eco97/31, European University Institute.
    • Handle: RePEc:eui:euiwps:eco97/31
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    Keywords

    CURRENCIES ; MONETARY POLICY;

    JEL classification:

    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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