Liu, Zheng; Pappa, Evi - London School of Economics (LSE) - 2005
planner under a cooperating regime internalizes a terms-of-trade externality that independent central banks tend to overlook … only internalizes the terms-of-trade externality, it also creates a terms-of-trade bias in favor the country with a larger … traded sector. Further, the planner tries to balance the terms-of-trade bias against the need to stabilize fluctuations in …