International Channels of Transmission of Monetary Policy and the Mundellian Trilemma

Helene Rey

IMF Economic Review, 2016, vol. 64, issue 1, 6-35

Abstract: This lecture argues that the Global Financial Cycle is a challenge for the validity of the Mundellian trilemma. The paper presents evidence that U.S. monetary policy shocks are transmitted internationally and affect financial conditions even in inflation-targeting economies with large financial markets. Hence flexible exchange rates are not enough to guarantee monetary autonomy in a world of large capital flows.

Date: 2016
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Related works:
Working Paper: International Channels of Transmission of Monetary Policy and the Mundellian Trilemma (2016)
Working Paper: International Channels of Transmission of Monetary Policy and the Mundellian Trilemma (2015)
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