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Determine the focal point for coordination
The focal point for coordination is point C, which is the unique symmetrical Pareto efficient outcome. Compared to this outcome the Nash equilibrium now involves both countries setting too fast a growth rate for their domestic money supply. This occurs as each country seeks to bid up the growth rate of its money supply, whilst again ignoring the adverse effects this has on the other country. In this situation such beggar-thy-neighbour policy leads to an expansionary bias.
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Jonathan has been in the continuous employment of Dockland cleaning and laundry Co. Ltd since 1st August 2000. He is also a member and secretary of the Cleaning and Laundry Workers
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