International Monetary Policy Coordination and Credibility Under Incomplete Information.

Recent theories converge in the idea that international monetary policy cooperation can be counter-productive. This paper reconsiders the role of policy cooperation and credibility in a two-country model with incomplete information about the type of the coordination mechanism. In the perfect Bayesian Nash equilibrium, the Rogoff proposition does not hold if the public has incomplete information about the ability of tyhe policymakers to adhere to international agreements. Even if non-cooperative policymakers are able to signal their type, corporation of central banks is beneficial.