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The “impossible trilemma” and the analysis of its validity by visualization through the use of artificial intelligence software

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  • Gancho Ganchev
  • Elena Stavrova
  • Vladimir Tsenkov
  • Mariya Paskaleva

Abstract

This research aims to visualize the “impossible trilemma”, i.e. the impossibility of simultaneously having a fixed exchange rate, free movement of capital and an independent monetary policy, for every economy through the application of artificial intelligence software. The advantages of visualization techniques are revealed. The explored countries are divided into the following panels: the Eurozone countries, the developed European countries (DEC), the developed non-European countries (DNEC), the BRICS countries (Brazil, Russia, India, China and South Africa), the developing European countries and the Organization of the Petroleum Exporting Countries (OPEC). The results of the research show a great level of confirmation of the trilemma for the developing economies and the developed non-European countries. This implies that there is a compromise between exchange rate stability, monetary independence, and free capital mobility.

Suggested Citation

  • Gancho Ganchev & Elena Stavrova & Vladimir Tsenkov & Mariya Paskaleva, 2020. "The “impossible trilemma” and the analysis of its validity by visualization through the use of artificial intelligence software," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 56-75,76-94.
    • Handle: RePEc:bas:econth:y:2020:i:4:p:56-75,76-94
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    References listed on IDEAS

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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