TY  - JOUR
AU  - Turnovsky,Stephen J.
AU  - d'Orey,Vasco
TI  - Monetary Policies in Interdependent Economies with Stochastic Disturbances:  A Strategic Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1824
PY  - 1987
Y2  - February 1987
UR  - http://www.nber.org/papers/w1824
L1  - http://www.nber.org/papers/w1824.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - This paper analyzes strategic monetary policies using a standard two country stochastic macro model. Three noncooperative equilibria, namely Cournot, Stackelberg, and Consistent Conjectural Variations, are considered.The Pareto Optimal equilibrium, where aggregate joint costs are minimizedis also considered, and all strategic equilibria are compared to the perfectly fixed and flexible exchange rate regimes. The main conclusions obtained are:(i) Demand shocks are much less problematical than supply disturbances from the viewpoint of macro stabilization; (ii) the gains from cooperation are typically small; (iii) the strategic equilibria all show substantial margins of superiority over the fixed and flexible regimes.
ER  -