NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

International Policy Coordination in a Dynamic Macroeconomic Model

Jeffrey Sachs

NBER Working Paper No. 1166
Issued in July 1983
NBER Program(s):   ITI   IFM

This paper illustrates the role for macroeconomic policy coordination when interdependent economies are pursuing disinflationary policies. Under flexible exchangerates, policy makers have an incentive to reduce inflation by pursuing contractionary policies that yield a currency appreciation. In a Nash, perfect foresight equilibrium,policy authorities in the model pursue contractionary policies to achieve currency appreciation, but these attempts cancel out, with the result that all countries end up pursuing excessively contractionary policies (relative to asymmetric Pareto optimum). The paper presents these resultsin a two-country, infinite-horizon difference game.

download in pdf format
   (177 K)

email paper

This paper is available as PDF (177 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1166

Users who downloaded this paper also downloaded these:
Oudiz and Sachs International Policy Coordination in Dynamic Macroeconomic Models
Oudiz and Sachs w1417 International Policy Coordination in Dynamic Macroeconomic Models
Fischer w2244 International Macroeconomic Policy Coordination
Eichengreen w17665 International Policy Coordination: The Long View
Eichengreen International Policy Coordination in Historical Perspective: A View from the Interwar Years
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us