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The Trilemma in History: Tradeoffs Among Exchange Rates, Monetary Policies, and Capital Mobility

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  • Maurice Obstfeld

    (University of California, Berkeley, NBER, and CEPR)

  • Jay C. Shambaugh

    (Dartmouth College)

  • Alan M. Taylor

    (University of California, Davis, NBER, and CEPR)

Abstract

The exchange-rate regime is often seen as constrained by the monetary policy trilemma, which imposes a stark tradeoff among exchange stability, monetary independence, and capital market openness. Yet the trilemma has not gone without challenge. Some argue that under the modern float there could be limited monetary autonomy; others, that even under the classical gold standard domestic monetary autonomy was considerable. This paper studies the coherence of international interest rates over more than 130 years. The constraints implied by the trilemma are largely borne out by history. © 2005 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 87 (2005)
Issue (Month): 3 (August)
Pages: 423-438

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Handle: RePEc:tpr:restat:v:87:y:2005:i:3:p:423-438

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  1. Carmen M. Reinhart & Kenneth S. Rogoff, 2002. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," NBER Working Papers 8963, National Bureau of Economic Research, Inc.
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  27. repec:rus:hseeco:181565 is not listed on IDEAS
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Falso trilema (para econs)
    by Javier Finkman in Exabruptos on 2010-05-14 09:24:00
  2. Blogs review: Navigating the open economy trilemma
    by ? in Bruegel blog on 2013-10-01 08:15:34
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