آیا بانک مرکزی اروپا و بانک فدرال واقعا نیاز به همکاری دارد؟ سیاست پولی بهینه در دو کشور جهان

A two-country model with monopolistic competition and price stickiness is employed to investigate the implications for macroeconomic stability and the welfare properties of three international policy arrangements: (a) cooperative, (b) non-cooperative and (c) monetary union. I characterize the conditions under which there is scope for policy cooperation and quantify the costs of non-cooperation and monetary union. The non-cooperative equilibrium may be suboptimal because of terms of trade spillover effects, while monetary union may be suboptimal because of the sluggishness of relative prices. Both the costs of policy competition and of a monetary union are sensitive to the values assumed for the intertemporal and international demand elasticity and the degree of openness of the economy. Independently of the calibration scenario adopted, the ECB has little to gain by coordinating with the Fed.

The aftermath of the European Monetary Union has changed the way macroeconomic policy has been conducted within and outside Europe. The establishment of a common currency has in fact created a major rival to the dollar and yen in the international financial markets. One question of crucial importance for developments in the world economy is whether the central banks of the United States, Japan and Europe should cooperate or not in pursuing stabilization policies. The purpose of this paper is to study the welfare properties and the implications for macroeconomic stability of different international monetary policy arrangements and to investigate whether and how the first best solution can be implemented in a decentralized setting. To address the questions of interest, I use a two-country model where each country is specialized in the production of a bundle of differentiated goods, production is monopolistically competitive, prices are staggered and there is no international price discrimination. Within this framework, I examine three types of international policy arrangements: (a) cooperative, (b) non-cooperative and (c) monetary union. Cooperation is modeled by assigning the conduct of monetary policy to a “supranational institution” that maximizes a weighted average of the utility of the consumers of both countries. Non-cooperation occurs when each central bank independently maximizes the utility of the domestic consumers taking as given foreign policy variables. Finally, monetary union can be viewed as “constrained cooperation,” since the monetary authority can only use the interest rate to achieve its goals, while the exchange rate is fixed. I consider policies under commitment: the monetary authorities cannot ignore past decisions and thus the policies analyzed are not, in general, time consistent in the sense of Kydland and Prescott (1977). The question of whether central banks should coordinate their policy actions is not new. Many authors in the past have analyzed similar issues: Hamada (1976); Oudiz and Sachs (1984) and Rogoff (1985) are early contributors to the literature. Corsetti and Pesenti 2001a and Corsetti and Pesenti 2001bObstfeld and Rogoff 1995, Obstfeld and Rogoff 1996 and Obstfeld and Rogoff 2000; Clarida et al. (2002) and Benigno and Benigno (2004) are more recent efforts. In this paper, I study the sources of conflict between the monetary policy objectives of two large economies and the extent to which different types of international policy arrangements may help overcome the suboptimality resulting from decentralized, non-cooperative decisions. I use a theoretical framework which encompasses the models of Corsetti and Pesenti 2001a and Corsetti and Pesenti 2001b; Obstfeld and Rogoff (2000) and Benigno and Benigno (2004) as specific cases. Contrary to these authors’, the general preferences specification adopted enables me to characterize the conditions under which there is scope for international policy coordination, quantify the costs of the suboptimal monetary arrangements for different values of key parameters (such as openness, substitutability between home and foreign goods and labor supply elasticity) and to assess the magnitude of the gains from cooperation. Like previous work, the analysis finds that there is relatively little scope for cooperation under either set of arrangements. However, contrary to the existing literature, it precisely pins down the logic of this result. Optimal policies are derived using an objective criterion that approximates the utility of the representative consumer. Rotemberg and Woodford (1998) first derived this objective for a closed economy. In an open economy the central bank is concerned not only with the variability of inflation and the output gap; it also takes into account the dynamics of the terms of trade and its interaction with domestic demand. Relative prices enter the welfare criterion because they play a crucial role in the transmission of foreign shocks. It is the concern about optimal reallocation of resources between the two economies that translates in an objective for the social planner which includes the variability of the deviations of the terms of trade and the covariance between domestic consumption and relative price depreciations. I show that the objective of independent central banks and of the social planner coincide when three conditions are satisfied: the elasticity of substitution between home and foreign goods and the intertemporal elasticity of substitution are equal to one and the degree of openness of the two economies is small. In this case, since terms of trade movements have no effect on domestic consumption and inflation and there are no incentives for policy competition and thus no gains from international policy coordination (as in Corsetti and Pesenti, 2001b; Benigno and Benigno, 2004). For unitary international demand elasticity cross-country consumptions are equalized in equilibrium, independently of terms of trade movements. However, when this elasticity is different from one, terms of trade movements affect relative consumption movements and national policymakers have incentives to use strategically the terms of trade to improve domestic relative welfare. The value of the intertemporal elasticity of substitution is also crucial for determining the incentives for policy competition: when preferences are not logarithmic foreign variables affect domestic inflation through terms of trade movements and this fosters competition among national policymakers. Under the general specification employed, monetary policies are strategic substitutes and coordinating monetary policy is potentially beneficial. Optimal policy under cooperation always achieves the first best and completely stabilizes domestic prices in each country. The magnitude of the costs from international policy competition depends on the parameterization of the model: costs increase with the coefficient of relative risk aversion and the international demand elasticity; with the labor supply elasticity and with the degree of openness of the economy. Because sustaining a (time-consistent) cooperative agreement between the two countries is difficult, I also analyze the welfare implications of a monetary union, an arrangement which can be viewed as “cooperation with one instrument only” (the union-wide nominal interest rate). A monetary union might generate welfare costs, because the distortions associated with the inertia of the terms of trade might dominate the gains of coordination (see, also Cooley and Quadrini, 2003). In the case of highly substitutable domestic and foreign goods, sufficiently flexible domestic prices, and little home-bias in consumption, a monetary union improves upon non-cooperative outcomes. Finally, under our assumptions, domestic inflation targeting emerges as the optimal monetary policy regime, but it cannot be supported as a Nash equilibrium for independent policymakers that wish to profit from spillover effects. Should the ECB and the Fed cooperate? The answer is quite robust for a wide range of parameter values and model specifications: although policy cooperation does improve welfare, gains are quantitatively small. In order to generate significant gains from policy coordination, one has to assume high degree of trade links between the Euro area and the US and unrealistically high values for the international elasticity of substitution and for the risk aversion coefficient. However, when we ask whether the UK should join the EMU, we find that gains are significant. The paper is organized as follows. The next section describes the model. Section 3 presents the welfare objective of the central bank in an open economy and Section 4 the calibration of the model. Section 5 studies optimal monetary policy for each of the policy regimes. Section 6 presents simulation results for a range of values of crucial parameters and Section 7 compares non-cooperation with monetary union. Section 8 concludes. The appendix contains a brief description of the derivations of the policy objective function.

This paper has studied the sources of conflict between the monetary policy objectives of two large economies and the extent to which different types of international policy arrangements may help to overcome the sub-optimality resulting from decentralized, non-cooperative decisions. I show that the social planer will always want to replicate the flexible price allocation by setting domestic inflation equal to zero in both countries and in all times. Independent monetary policies, on the other hand, seek to replicate the flexible price allocation only under special conditions. For values of η and σ in the neighborhood of η=σ=1, the gains from cooperation are negligible. However, there are empirically reasonable parameter values for which significant gains from cooperation can be generated. Non-cooperation implies welfare losses because of the presence of beggar-thy-neighbor and beggar-thyself effects. The magnitude and nature of these effects depends crucially on the international demand and intratemporal elasticities. For given values of these elasticities, the welfare costs from non-cooperation increase with the degree of openness of the economy. As the economy becomes autarkic, the short run adjustment role of the nominal exchange rate is reduced and consumer prices are almost unresponsive to exchange rate changes. Moreover, the costs of non-cooperation are negatively related to the correlation between home and foreign productivity shocks and to the inverse of the labor supply elasticity. Fixing the exchange rate introduces an additional distortion in the economy, the inertia of the terms of trade, that does not allow the optimal reallocation of resources to be achieved. The adoption of a common currency has the potential of reducing the welfare costs of monetary policy competition when the economies are open to trade, relatively flexible, and when home and foreign goods are highly substitutable. As long as trade interdependencies between Europe and the US are as small as those experienced in the last 50 years, cooperation between the ECB and the Fed will produce little welfare gain. This might not true however when considering, e.g. the UK and the Euro area economies. This paper has focused on the design of optimal monetary policy under commitment. The assumption that the policymakers can commit to policy before prices are set could impart a bias on the estimates on the potential gains from cooperation. On the one hand, setting policy in advance implies that the cooperative institutional arrangements have no independent impact on expectations within the domestic economies. Since the analysis precludes such benefits, it might understate the scope for international policy cooperation. On the other hand, the ability to make commitments could aggravate non-cooperation problems of the type described by Rogoff (1985). In this case, the paper could overstate the potential benefits of international policy cooperation. For these reasons, commitment should be an endogenous outcome of the model, and of the arrangements among countries. Future research studying the conditions under which this may occur may improve our understanding of the interactions existing among open economies. Finally, the assumption of perfect information on the part of the policymakers narrows the generality of the main results on cooperation. In our model the flexible price allocation is efficient and the central bank has full information for implementing it. However, under asymmetric information the central bank cannot implement always the flexible price allocation and the nature of optimal policy changes dramatically and involves more persistence relative to the case of perfect information (see Aoki, 2002; Svensson and Woodford, 2002 for a recent treatment of this issue). The development of methods for characterizing optimal policy when different agents have different information sets remains an important topic for further research both in closed and open economy models.