EconPapers    
Economics at your fingertips  
 

Monetary trilemma, dilemma, or something in between?

Ruijie Cheng and Ramkishen Rajan

International Finance, 2020, vol. 23, issue 2, 257-276

Abstract: This paper revisits the monetary “trilemma” versus “dilemma” debate by examining empirically interest‐rate policy independence for a large sample of both advanced and developing countries over the period 1973–2014. We broadly concur with the growing body of literature that suggests that the trilemma still holds, emphasizing the important insulating effects afforded by exchange‐rate flexibility. However, as with Han and Wei (2018), we also document the existence of an asymmetric pattern or 2.5‐lemma between the trilemma and dilemma; though, in contrast to them, we find there seems to be evidence of a “fear of capital reversal” rather than a “fear of appreciation.” We further find that holding higher levels of foreign reserves may help countries regain a degree of monetary‐policy autonomy.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1111/infi.12363

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:intfin:v:23:y:2020:i:2:p:257-276

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1367-0271

Access Statistics for this article

International Finance is currently edited by Benn Steil

More articles in International Finance from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery (contentdelivery@wiley.com).

 
Page updated 2024-12-28
Handle: RePEc:bla:intfin:v:23:y:2020:i:2:p:257-276