Katharine A. Rockett
University of Essex
Department of Economics
Information about this author at RePEc
NBER Working Papers and Publications
|October 1986||International Macroeconomic Policy Coordination When Policy-Makers Disagree on the Model|
with : w2059
The existing literature on international macroeconomic policy coordination makes the unrealistic assumption that policy-makers all know the true model, from which it follows in general that the Nash bargaining solution is superior to the Nash non-cooperative solution. But everything changes once we recognize that policy-makers' models differ from each other and therefore from the "true" model. It is still true that the two countries will in general be able to agree on a cooperative policy package that each believes will improve the objective function relative to the Nash non-cooperative solution. However, the bargaining solution is as likely to move the target variables in the wrong direction as in the right direction, in the light of a third true model. This paper illustrates these theore...
- Translated into Spanish in Instituto de Estudios Fiscales, Madrid: Hacienda Publica Espanola.
- Frankel, Jeffrey A. and Katharine Rockett. "International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model." From The American Economic Review, Vol. 78, No. 3, pp. 318-340, (June 1988).