Abstract
| We investigate the welfare gains of international monetary coordination in the presence of internationalized production-firms employ both domestic and foreign produced intermediate goods. Incorporating internationalized production into a two-country intertemporal general equilibrium model, we study the role for a delegated monetary authority in implementing the competitive allocation. We find that the range of parameter values that supports delegated policy coordination as well as the sizes of welfare gains from policy coordination shrink when the extent of internationalized production rises. Thus, international trade in intermediate goods diminishes the viability of an international monetary authority. |