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Empirical Evidence of a New Trilemma

Author

Listed:
  • Percic Stanislav

    (Alexandru Ioan Cuza University of Iaoi, Romania)

  • Apostoaie Constantin-Marius

    (Alexandru Ioan Cuza University of Iaoi, Romania)

Abstract

The scope of this research paper is to investigate the trade-off which appears when dealing with the “new trilemma” (formed by price stability, financial stability and sovereign debt sustainability) brought forward by Duvvuri Subbarao. More specifically, the paper offers interesting empirical proofs on the existence of trade-off within the “holy trinity” using the Principal Components Analysis (PCA) and confirming the robustness of the results with a cross-country panel OLS regression.

Suggested Citation

  • Percic Stanislav & Apostoaie Constantin-Marius, 2013. "Empirical Evidence of a New Trilemma," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1426-1431, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:1:p:1426-1431
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    More about this item

    Keywords

    trilemma; holy trinity; price stability; financial stability; sovereign debt stability; Principal Components Analysis;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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