Testing The Trilemma Hypothesis And Measuring Their Effects On Inflation, Growth And Volatility For Poland

Yu Hsing

Montenegrin Journal of Economics, 2013, vol. 9, issue 3, 57-64

Abstract: This paper finds evidence of the trilemma for Poland. Exchange rate stability, monetary independence and financial integration have a tradeoff. Mainly because of its plan to join the ERM II and pursuing for inflation targeting, the policy combination of exchange rate stability and monetary independence has been prevalent since 1991. More exchange rate stability raises the growth rate but also increases output volatility. More financial integration reduces the inflation rate, inflation volatility and output volatility. More monetary independence does not affect inflation, growth and volatility. Hence, these impacts may be considered in reviewing and selecting a policy combination.

Date: 2013
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