Policy Cooperation Among Benevolent Governments May Be Undesirable

This paper presents a simple counterexample to the belief that policy cooperation among benevolent governments is desirable.It also explains circumstances under which such counterexamples are possible and relates them to the literature on time inconsistency.^Federal Reserve Bank of Minneapolis and University of Minnesota.The views expressed herein are those of the author and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.This paper is preliminary and is circulated to stimulate discussion.