Conference Proceedings
Year
2000
Abstract
The aim of this article is to study the various possible strategies of both American and European monetary policy makers, especially with respect to the euro-dollar exchange rate. For that, we use a game theoretical approach, first with a finite horizon, second, with an infinite one. First, in the finite horizon case, an optimal Pareto solution can only be attained if both players mutually agree not to disrup each other’s expectations on the exchange rate. Secondly, in the infinite horizon situation, it is in the interest of each player to address a clear and strong signal to the other about its own strategy. This result leads to some propositions as to the optimal of the European Central Bank with respect to the Federal reserve system.
FOURÇANS, A. et WARIN, T. (2000). Euroland Versus USA: A Theoretical Framework for Monetary Strategies. Dans: Globalization in the 21st Century. International Trade and Finance Association (ITFA), pp. 249-261.