A First Look at the Trilemma Vis-à-Vis Quadrilemma Monetary Policy Stance in a Pacific Island Country Context

Jen Je Su (), Lavenia Cocker (), Disusu Delana () and Parmendra Sharma
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Jen Je Su: Department of Accounting, Finance and Economics, Griffith Asia Institute, Griffith University, Queensland, Australia
Lavenia Cocker: Reserve Bank of Fiji, Suva, Fiji
Disusu Delana: Reserve Bank of Fiji, Suva, Fiji
Parmendra Sharma: Department of Accounting, Finance and Economics, Griffith Asia Institute, Griffith University, Queensland, Australia

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2018, vol. 21, issue 01, 1-22

Abstract: Initiated by a central bank, this is the first study to examine and understand the trilemma as well as the quadrilemma monetary policy challenges in the case of Pacific Island countries. Taking Fiji as an example, over the 1975–2013 period, the trilemma, monetary independence and exchange rate stability might have been the more fervently pursued stance; the quadrilemma focus appears to have shifted to foreign reserves and capital account openness. When the full sample period is split into two subsamples, results show that the policy emphasis might have shifted from monetary independence, capital account openness, and foreign reserves to exchange rate stability, monetary independence, and foreign reserves. Policy implications are discussed.

Keywords: Monetary independence; exchange rate stability; capital openness; foreign reserves; trilemma; quadrilemma (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S0219091518500029

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