Global Implications of Self-Oriented National Monetary Rules

Revisiting the Costs of Self-Oriented National Monetary Rules∗

The gains from international monetary policy cooperation are sizeable when the crossborder spillovers of shocks are significant and policymakers face a strong incentive to use monetary policy to insulate their country from these spillovers. We show that financial market arrangements play an integral role in determining these incentives. In a quantitative two-countries, two-goods model with stic...

Stabilization, Accommodation, and Monetary Rules

A central feature of the monetarist approach to the problem of inflation is a preannounced gradual reduction in monetary growth. This reduction is to be sustained until a monetary growth consistent with a zero, or an acceptably low, target rate of inflation is reached. Thereafter, monetary growth is to be held constant at this new rate. The specifics of this prescription differ by the type of m...

Self-organizing Complex Networks: individual versus global rules

We introduce a form of Self-Organized Criticality (SOC) inspired by the new generation of evolutionary game theory, which ranges from physiology to sociology. The single individuals are the nodes of a composite network, equivalent to two interacting subnetworks, one leading to strategy choices made by the individuals under the influence of the choices of their nearest neighbors and the other me...

Simple Monetary Rules Under Fiscal Dominance

This paper asks whether an aggressive monetary policy response to inflation is feasible in countries that suffer from fiscal dominance, as long as monetary policy also responds to fiscal variables. We find that if nominal interest rates are allowed to respond to government debt, even aggressive rules that satisfy the Taylor principle can produce unique equilibria. But following such rules resul...

Introductory Remarks on Monetary Policy Rules