TY  - JOUR
AU  - Turnovsky,Stephen J.
AU  - d'Orey,Vasco
TI  - The Choice of Monetary Instrument in Two Interdependent Economies Under Uncertainty
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2604
PY  - 1989
Y2  - July 1989
UR  - http://www.nber.org/papers/w2604
L1  - http://www.nber.org/papers/w2604.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 the choice of monetary instrument in a stochastic two country setting where each country's set of monetary policy instruments includes both the money supply and the interest rate. It shows how the optimal choice of instrument is determined In two stages. First, for each pair, the minimum welfare coat for each economy is determined This defines a par of payoff matrices and the second stage involves determining the Nash equilibrium for this bimatrix game. In our illustrative example for the alternative shocks considered, a dominant Nash equilibrium is always obtained.
ER  -