Do the ECB and the fed really need to cooperate? Optimal monetary policy in a two-country world

Adao, B., Correia, I.H., Teles, P., 2001. Gaps and triangles. Working Paper No. 01-13, Federal Reserve Bank of Chicago. Aoki, K., 2002. Optimal commitment policy under noisy information. CEPR Discussion Papers No. 3370. Backus, 1992, International business cycles, Journal of Political Economy, 100, 745, 10.1086/261838 Benigno, P., 2001. Price stability with imperfect financial integration. CEPR Discussion Paper No. 2854. Benigno, 2004, Price stability in open economies, Review of Economic Studies, 70, 743, 10.1111/1467-937X.00265 Calvo, 1983, Staggered prices in a utility maximizing framework, Journal of Monetary Economics, 12, 383, 10.1016/0304-3932(83)90060-0 Canova, 1993, Trade Interdependencies and International Business Cycles, Journal of International Economics, 34, 23, 10.1016/0022-1996(93)90065-6 Chari, 1991, Optimal fiscal and monetary policy, Journal of Money, Credit, and Banking, 23, 519, 10.2307/1992686 Chari, V.V., Kehoe, P., McGrattan, E., 1998. Monetary shocks and real exchange rates in sticky price models of international business cycles. Staff Report No. 223, Federal Reserve Bank of Minneapolis, Research Department. Clarida, 2002, A simple framework for international monetary policy analysis, Journal of Monetary Economics, 49, 879, 10.1016/S0304-3932(02)00128-9 Cooley, F.T., Quadrini, V., 2003. Common currencies vs. monetary policy independence. Review of Economic Studies, forthcoming. Corsetti, 2001, Welfare and macroeconomic interdependence, Quarterly Journal of Economics, 116, 421, 10.1162/00335530151144069 Corsetti, G., Pesenti, P., 2001b. The International dimension of optimal monetary policy. NBER Working Paper No. 8230. Gali, 1999, Technology, employment and the business cycle, American Economic Review, 89, 249, 10.1257/aer.89.1.249 Gali, J., Monacelli, T., 2002. Optimal monetary policy and exchange rate volatility in a small open economy. Universitat Pompeu Fabra. CEPR Working Paper Series, No. 3346. Gali, J., Gertler, M., Lopez-Salido, D., 2002. Markups, gaps and the welfare costs of business fluctuations. CEPR Discussion Paper No. 3212. Hamada, 1976, A Strategic analysis of monetary independence, Journal of Political Economy, 84, 677, 10.1086/260471 Kydland, 1977, Rules rather than discretion, Journal of Political Economy, 85, 473, 10.1086/260580 Mundell, 1961, A theory of optimum currency areas, American Economic Review, 51, 657 Obstfeld, 1995, Exchange rate dynamics redux, Journal of Political Economy, 103, 624, 10.1086/261997 Obstfeld, 1996 Obstfeld, M., Rogoff, K., 2000. Do we really need a new international monetary compact? NBER Working Paper No. 7864. Oudiz, G., Sachs, J., 1984. International policy coordination in dynamic macroeconomic models. NBER Working Paper No. 1417. Rogoff, 1985, Can international monetary policy be counterproductive?, Journal of International Economics, 18, 199, 10.1016/0022-1996(85)90052-2 Rotemberg, J., Woodford, M., 1998. An optimization based framework for the evaluation of monetary policy. NBER Technical Working Paper No. 233. Smets, 2002, Openness, imperfect exchange rate pass-through and monetary policy, Journal of Monetary Economics, 49, 947, 10.1016/S0304-3932(02)00126-5 Svensson, L., Woodford, M., 2002. Indicator variables for optimal policy under asymmetric information. Journal Of Economic Dynamics and Control, forthcoming. Woodford, M., 1999. Optimal monetary policy inertia. NBER Working Paper No. 7261. Woodford, M., 2003. Interest and Prices: foundations of a Theory of Monetary Policy. Princeton University Press, Princeton.