Description: Economic Cooperation in an Uncertain World examines the case of international policy coordination in the face of macroeconomic uncertainties. It begins by developing a theoretical framework for analyzing the benefits of coordination when there is uncertainty about the effects of macroeconomic policies. As an illustration, this framework is applied to analyze the efforts of the central banks of the major industrialized countries to deal with the global stock market crash of October 1987.
Review Quotes: Ghosh and Masson were the first to analyze model uncertainty in the context of racional decision making. And when they did they found that it could actually be an argument for policy coordination. Since this runs counter to the conventional wisdom of policy makers, it is a very important observation. Matthew B. Canzoneri- Professor of Economics, Georgetown University