Of course, central banks consider “spillbacks” to their policies from abroad, but these may be a small fraction of overall spillovers. In what follows, I will examine sensible rules of monetary behavior assuming the domestic mandate does not trump international responsibility. Rules of the game What would be the basis for the new rules?
As described elsewhere, the state of theoretical models and empirical work do not allow for clear cut identification of spillovers and their consequences.2 Rather than wait for clear identification, which may be a long while coming, perhaps as a start policies could be broadly rated based on analytical inputs and discussion.