Fixed exchange rates and non-cooperative monetary policies

• Autores: Miguel Sebastián Gascón
• Localización: Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales, ISSN-e 2255-5471, Nº. 14, 1987, 82 págs.
• Idioma: inglés
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• Resumen

  • This paper presents a model which in a world with fixed exchange rates and absence of capital controls non-cooperative game yield multiple Nash equilibria with nonoptimal allocations, when we introduce regimes as strategies for the players. In general there is a unique Perfect Equilibrium for the game with both strategies. The sub-optimality of the non-cooperative solution provides scope for international coordination, in the form of joint choice of non-inflationary polices that dominate the Nash equilibria allocations.