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Real Exchange Rate Targeting. ¿Trilema Monetario o Control de Capitales? La Política Fiscal

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  • Javier Gerardo Milei

    () (no institution)

Abstract

The paper shows that the impossibility to reach a real exchange rate target, as proposed by the "Monetary Trilemma" can be circumvented by adding one policy instrument. In the choice between countercyclical fiscal policy and control of capital movements, the first one appears as the preferred option, since it provides a stable equilibrium. Not only an equilibrium is not achieved in the second case, but the restrictions to capital movements in an economy whith a low level of capitalization does not look like a sensible choice.

Suggested Citation

  • Javier Gerardo Milei, 2004. "Real Exchange Rate Targeting. ¿Trilema Monetario o Control de Capitales? La Política Fiscal," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(2), pages 63-87, January.
  • Handle: RePEc:ief:reveye:v:42:y:2004:i:2:p:63-87
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    File URL: http://ief.eco.unc.edu.ar/files/publicaciones/economiayestadistica/2004_42_n2/4_milei.pdf
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    References listed on IDEAS

    as
    1. Dornbusch, Rudiger, 1976. " The Theory of Flexible Exchange Rate Regimes and Macroeconomic Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 255-275.
    2. Robert A. Mundell, 1962. "The Appropriate Use of Monetary and Fiscal Policy for Internal and External Stability," IMF Staff Papers, Palgrave Macmillan, vol. 9(1), pages 70-79, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Foreign Exchange; Open Economy Macroeconomics;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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