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International monetary policy coordination in a new Keynesian model with NICE features

Author

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  • Jean-Christophe Poutineau

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Gauthier Vermandel

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

Abstract

This paper provides a static two country new Keynesian model to teach two related questions in international macroeconomics: the international transmission of unilateral monetary policy decisions and the gains coming from the coordination monetary rules. We concentrate on "normal times" and use a thoroughly graphical approach to analyze the questions at hands. In this setting monetary policy is conducted using interest rates rules and economic integration between nations does not necessarily create the case for the coordination of monetary policy. In particular, we show that the conduct of optimal national monetary policies does not make any difference with the coordination of national policies, as this creates a situation where the international monetary system operates "Near an International Cooperative Equilibrium".

Suggested Citation

  • Jean-Christophe Poutineau & Gauthier Vermandel, 2018. "International monetary policy coordination in a new Keynesian model with NICE features," Post-Print hal-01745620, HAL.
    • Handle: RePEc:hal:journl:hal-01745620
    DOI: 10.1080/00220485.2018.1438945
    Note: View the original document on HAL open archive server: https://hal.science/hal-01745620
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    Keywords

    monetary policy; New Keynesian macroeconomics; international macroeconomics; economic policy; optimal interest rate rules; A20; E10; E50; F41;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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