Strategic Delegation in Monetary Unions
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چکیده
In monetary unions, monetary policy is typically made by delegates of the member countries. This procedure raises the possibility of strategic delegation that countries may choose the types of delegates to inuence outcomes in their favor. We show that without commitment in monetary policy, strategic delegation arises if and only if three conditions are met: shocks a¤ecting individual countries are not perfectly correlated, risk-sharing across countries is imperfect, and the Phillips Curve is nonlinear. Moreover, ination rates are ine¢ ciently high. We argue that ways of solving the commitment problem, including the emphasis on price stability in the agreements constituting the European Union are especially valuable when strategic delegation is a problem. JEL Nos: E58, E61. Chari and Jones: Department of Economics, University of Minnesota and Federal Reserve Bank of Minneapolis; Marimon: Universitat Pompeu Fabra, CREi and CREA. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
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تاریخ انتشار 2004