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The International Policy Trilemma in the Post-Bretton Woods Era

Mandilaras, A (2015) The International Policy Trilemma in the Post-Bretton Woods Era Journal of Macroeconomics, 44. pp. 18-32.

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Abstract

The international macroeconomic policy trilemma suggests that despite the appeal of exchange rate stability, financial account openness and monetary sovereignty, these cannot be achieved simultaneously. Using elements of Euclidean geometry, this paper proposes a new method for testing the trilemma and finds considerable evidence in support of it. Further tests indicate that, on average, policy configurations are not on the trilemma constraint, i.e. there is a degree of ‘trilemma-ineffectiveness’, which is costly for real output growth and price inflation. It is shown that these costs can be attributed to limited exchange rate stability and financial account openness.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
AuthorsEmailORCID
Mandilaras, AUNSPECIFIEDUNSPECIFIED
Date : 1 June 2015
Identification Number : 10.1016/j.jmacro.2015.02.004
Contributors :
ContributionNameEmailORCID
EditorVanHoose, DUNSPECIFIEDUNSPECIFIED
Additional Information : NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Macroeconomics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version will be subsequently published in Journal of Macroeconomics,in August 2015, DOI 10.1016/j.jmacro.2015.02.004.
Depositing User : Symplectic Elements
Date Deposited : 04 Mar 2015 12:50
Last Modified : 10 Mar 2015 14:33
URI: http://epubs.surrey.ac.uk/id/eprint/807216

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