A Tale of Two Trilemmas

Kevin Hjortshøj O’Rourke
Authors registered in the RePEc Author Service: Kevin Hjortshøj O'Rourke

Chapter 26 in Enacting Globalization, 2014, pp 287-297 from Palgrave Macmillan

Abstract: Abstract EMU is a radical solution to the classic Mundell-Fleming macroeconomic policy txilemma. Unfortunately, it suffers from serious design flaws, and in particular from a lack of fiscal or banking union. This can be understood in terms ofRodrik’s ‘fundamental political txilemma of the world economy’, which can also shed light on such issues as the quality of EU democracy. Hitherto, European governments have been able to navigate ‘within the triangles’ implied by this trilemma, but the current crisis is pushing them towards the edges, forcing them to make hard choices between democracy, the nation-state and deep economic integration. It is not clear what they will eventually decide.

Keywords: Exchange Rate; Monetary Policy; Capital Mobility; European Monetary Union; Capital Control (search for similar items in EconPapers)
Date: 2014
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Working Paper: A Tale of Two Trilemmas (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-36194-3_26

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DOI: 10.1057/9781137361943_26

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