Maurice Obstfeld, Mahvash S. Qureshi, (2017), “Understanding the Global Financial Cycle”, IMF Blog, 27 Οκτωβρίου
The boom and bust in cross-border capital flows around the global financial crisis, and in its aftermath, have rekindled debates on the existence and implications of a “global financial cycle.”
The traditional open-economy (“Mundell-Fleming”) model postulates that countries face a “trilemma”: a trade-off among the objectives of exchange rate stability, free capital mobility, and independent monetary policy. If a country chooses exchange rate stability and free capital mobility, it must give up monetary policy autonomy. Conversely, an independent monetary policy in the presence of free capital flows is possible through exchange rate flexibility.
Yet the repeated surges and reversals in capital flows that have often ended in debilitating crises—even in countries with flexible exchange rate regimes—have raised doubts about the degree of autonomy that flexible exchange rates confer, and the ability of open economies to escape the cycle amid rising financial integration.
Σχετικές Αναρτήσεις
- Alcidi, Cinzia, (2017), «Fiscal Policy Stabilisation and the Financial Cycle in the Euro Area», Fellowship Initiative, Discussion Paper 052, European Commission, Ιούλιος
- ECB, (2017), «Financial Stability Review», ECB, May