We use a non-Bayesian approach to uncertainty, where “ambiguity” is taken into account, in order to analyze the issue of central bank transparency, and we underline that the use of such an approach may greatly change the results. We reconsider a specific argument against transparency found...

In a global game, larger ambiguity is shown to decrease the amount of coordination each player perceives. Consequently, small uncertainty tends to select the Pareto dominated equilibrium of the game without uncertainty. Implications for models of financial crises are drawn.

In a two-country world in which the amount of international liquidity is inadequate, we study the effect of the degree of capital mobility on the non-cooperative equilibrium of the game between the monetary authorities of these countries under two kinds of fixed exchange rate systems. One is...

We develop an argument which shows that inflation tends to be both lower and less variable in a symmetric monetary zone (a European Monetary Union) than in an asymmetric one (a Deutsche-Mark zone). The argument is related to issue of credibility of monetary policy. We show that in the symmetric...

Using a two-country model of the "New Open-Economy Macroeconomics" which is analytically solved through a second-order approximation, we consider optimal monetary policies in a monetary union and in a flexible exchange rate regime. Comparing these two regimes, we show that a monetary union is...

The paper extends Rogoff's argument on counterproductive international monetary cooperation to the case of more than two countries and underlines that it can lead to an argument in favor of a partial monetary cooperation, i.e. between only a subset of countries. First, in a n-country model where...

According to the literature, in an expectations-augmented Phillips curve model, opacity is always preferred to transparency on central bank forecasts. By modelling the private sector's behavior explicitly, we show that transparency reduces the shocks. Consequently, transparency can be preferred.