Test of the Impossible Trinity Hypothesis for Five Selected Countries in the Asian and Pacific Regions

Yu Hsing
Additional contact information
Yu Hsing: Southeastern Louisiana University

Economics Bulletin, 2012, vol. 32, issue 1, 616-623

Abstract: This paper examines the functional form of the impossible trinity hypothesis for five selected countries in the Asian and Pacific regions including Australia, Japan, New Zealand, Singapore and South Korea. The linear, log-log and semi-log forms are compared. Based on the mean absolute percent error and Akaike information criterion, we find that the semi-log form on the dependent variable performs better than the other three forms. The goodness of fit is relatively high, suggesting that there is support for the impossible trinity hypothesis. These countries may adopt different policy combinations. Australia maintains a middle ground approach to all three goals. South Korea emphasizes monetary policy independence and financial market openness and allows the exchange rate of the won to fluctuate freely based on market forces.

Keywords: Impossible trinity; trilemma; exchange rate stability; monetary policy independence; financial market openness; functional form (search for similar items in EconPapers)
JEL-codes: E5 F4 (search for similar items in EconPapers)
Date: 2012-02-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I1-P57.pdf (application/pdf)

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:ebl:ecbull:eb-12-00096

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().