02331cas a2200241 a 4500 AALejournalIMF017431 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475577549 1018-5941 BD-DhAAL BD-DhAAL Korinek, Anton. Currency Wars or Efficient Spillovers? : A General Theory of International Policy Cooperation / Anton Korinek. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (66 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In an interconnected world, national economic policies regularly lead to large international spillover effects, which frequently trigger calls for international policy cooperation. However, the premise of successful cooperation is that there is a Pareto inefficiency, id est if there is scope to make some nations better off without hurting others. This paper presents a first welfare theorem for open economies that defines an efficient benchmark and spells out the conditions that need to be violated to generate inefficiency and scope for cooperation. These are: (i) policymakers act competitively in the international market, (ii) policymakers have sufficient external policy instruments and (iii) international markets are free of imperfections. Our theorem holds even if each economy suffers from a wide range of domestic market imperfections and targeting problems. We provide examples of current account intervention, monetary policy, fiscal policy, macroprudential policy/capital controls, and exchange rate management and show that the resulting spillovers are Pareto efficient, as long as the three conditions are satisfied. Furthermore, we develop general guidelines for how policy cooperation can improve welfare when the conditions are violated. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2017/025 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/025/001.2017.issue-025-en.xml IMF e-Library