Angrick, Stefan, (2015), “Global Liquidity and Monetary Policy Autonomy-An Examination of Open-Economy Policy Constraints”, IMK Working Paper 159, 8 Δεκεμβρίου.
This paper examines the monetary policy constraints facing economies on a fixed peg or managed float regime, contrasting the Mundell-Fleming Trilemma view against the Compensation view commonly found at central banks. While the former holds that foreign exchange inflows and outflows affect the domestic money base, constraining monetary policy under nonfloating regimes unless capital controls are adopted, the latter purports that endogenous sterilisation of foreign exchange flows invalidates this trade-off. The predictions of both theories are empirically evaluated for five East Asian economies using central bank balance sheets, vector error correction models and impulse response functions. The findings indicate that the dynamics for the economies studied correspond more closely to the Compensation view than the Trilemma view, suggesting that it is a sustained loss of foreign exchange reserves that imposes a relevant constraint on autonomy rather than the adoption of a non-floating exchange rate regime.
Σχετικές Αναρτήσεις
- International Monetary Fund, (2015), “Global Financial Stability Report October 2015 – Vulnerabilities, Legacies, and Policy Challenges Risks Rotating to Emerging Markets”, World Economic and Financial Surveys, Οκτώβριος.
- Turner, Adair, (2015), “Why We Need More Radical Policies To Kickstart Global Growth”, Social Europe Journal, 7 Οκτωβρίου.