Japanese researchers model success and failure of international cooperation
Incentive to renege on an agreement can be overcome, economists say
It is possible to model a situation where central banks cooperate on a globally optimal monetary policy, research published today (August 17) by the Bank of Japan finds.
Cooperation between central banks is often seen as desirable, because monetary policy can prove a ‘beggar-thy-neighbour' policy by triggering currency depreciation. The difficulty is, cooperation generally requires a country to subjugate its own interests to those of the global economy, at least partially.
The paper's authors
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