Eric Monnet, 13 June 2018

In the Bretton woods system, capital controls ensured the independence of monetary policy. This column argues that it is impossible to understand how they worked without understanding their role in supporting credit controls at the time, which were used to fight inflation without raising the domestic interest rate. This may be relevant today in emerging markets in which central bank instruments still resemble those used under Bretton Woods. 

Michael Bordo, Harold James, 06 April 2015

The classic exchange-rate trilemma analysis argues that capital mobility, monetary autonomy and fixed exchange rates are incompatible. This column shows how policy trilemma analysis can be extended to other domains, specifically financial stability, political economy, and international relations. It argues that analysing these trade-offs can help to identify policy options that balance macroeconomic objectives and political realities in the face of globalisation.

Stephen Grenville, 26 November 2011

The impossible trinity doctrine – that it is not possible to have a fixed exchange rate, monetary policy autonomy, and open capital markets – still holds powerful sway over policymakers and academia. But it does not reflect reality in East Asian emerging countries. Assets in different currencies and different countries are not close substitutes. Capital flows to emerging countries present serious challenges, but the trinity is not the best framework for analysing the policy options.

Joshua Aizenman, Menzie Chinn, Hiro Ito, 09 January 2009

Is the trinity impossible? This column traces the evolution of the three aspects of the trilemma – exchange rate stability, monetary independence, and financial integration – across countries over the last four decades. A rise in one trilemma variable does result in a drop of a linear weighted sum of the other two.

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