The Political Economy of International Monetary Interdependence

Koichi Hamada has made seminal contributions to the study of economic interdependence and was one of the key originators of the game-theoretic approach to the topic. In this book, he applies current methods of game theory, public economics, and oligopoly theory to the problem of the choice of international monetary regimes in a world where goods markets and capital markets are increasingly integrated. The book examines how the choice of an international monetary regime affects the nature of policy interdependence and distribution of economic welfare among countries, what kind of international monetary regime each country wishes to choose, and what kind of regime is most likely to be realized. It shows that, in a world where a few large nations have substantial influence, it is important to recognize both the mutual strategic interdependence and differing nature of strategic structures from one regime to another. The first three chapters discuss the kinds of incentives participating countries face when deciding whether to agree on the adoption or alteration of a monetary regime. The remaining chapters show how the nature of policy interdependence differs depending on the exchange rate system. Contents Political and Economic Aspects of International Monetary Relations * The Choice of International Monetary Regimes * On the Political Economy of Monetary Integration: A Public Economic Approach * International Monetary Interdependence in a Keynesian Model * A Strategic Analysis of Monetary Interdependence: A Flexible Price Model * Exchange Rate Regimes and the Effect of Changes in the Terms of Trade * The International Transmission of Stagflation under Fixed and Flexible Exchange Rates * Monetary Interdependence under a Managed Float System