Abstract.
We study a world economy where worldwide policy coordination is essential to optimally stabilize unfavorable common supply shocks. We develop a two-stage game to investigate how to implement the first-best response to these shocks via a multilateral institution, whose board of directors is composed of a representative per each member country. In a first stage, national governments nominate their representatives on the board. In a second stage, the board collectively chooses stabilization policies. We compare the relative merits of two collective choice mechanisms – bargaining and majority voting – in avoiding manipulation of the cooperative agreement through the strategic nomination of national representatives.
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Morales, A., Padilla, A. Multilateral institutions for international economic policy coordination: bargaining vs voting. Span Econ Rev 1, 263–282 (1999). https://doi.org/10.1007/s101080050012
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DOI: https://doi.org/10.1007/s101080050012