The Elusive Gains from Nationally Oriented Monetary Policy

The consensus in the recent literature is that gains from international monetary cooperation are negligible, and so costs of a breakdown cooperation. However, when assessed conditionally on empirically-relevant dynamic developments economy, welfare cost moving away regimes explicit or implicit may rise to multiple times economic fluctuations. In economies with incomplete markets, incentives act non-cooperatively driven by emergence global imbalances, i.e., large net-foreign-asset positions; and, complete divergent real wages.