Strategic delegation in monetary unions

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The Manchester School, 2004, v.72(s1) 19-33
To cite or link this document: Chari, V.V. Jones, Larry E. Marimon, Ramon
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa 2004-04-01
dc.identifier.citation The Manchester School, 2004, v.72(s1) 19-33
dc.description.abstract 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 influence outcomes in their favor. We show that without commitment in monetary policy, strategic delegation arises if and only if three conditions are met: shocks affecting individual countries are not perfectly correlated, risk-sharing across countries is imperfect, and the Phillips Curve is nonlinear. Moreover, inflation rates are inefficiently 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.
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 842
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.title Strategic delegation in monetary unions
dc.type info:eu-repo/semantics/workingPaper 2016-06-04T02:50:49Z
dc.subject.keyword Macroeconomics and International Economics
dc.subject.keyword strategic delegation
dc.subject.keyword monetary union
dc.subject.keyword time-consistency
dc.subject.keyword monetary policy
dc.rights.accessRights info:eu-repo/semantics/openAccess

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