Arbeitspapier
Trilemma policy convergence patterns and output volatility
We examine the open macroeconomic policy choices of developing economies from the perspective of the economic 'trilemma' hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging towards a 'middle ground' among emerging market economies - managed exchange rate flexibility underpinned by sizable holdings of international reserves, intermediate levels of monetary independence, and controlled financial integration. Emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence. Yet this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.
- Sprache
-
Englisch
- Erschienen in
-
Series: Working Paper ; No. 695
- Klassifikation
-
Wirtschaft
Foreign Exchange
Financial Aspects of Economic Integration
Open Economy Macroeconomics
Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
- Thema
-
impossible trinity
international reserves
financial liberalization
exchange rate regime
Volkswirtschaft
Gesamtwirtschaftliche Produktion
Volatilität
Wechselkurssystem
Währungsreserven
Aufstrebende Märkte
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Aizenman, Joshua
Ito, Hiro
- Ereignis
-
Veröffentlichung
- (wer)
-
University of California, Economics Department
- (wo)
-
Santa Cruz, CA
- (wann)
-
2012
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Aizenman, Joshua
- Ito, Hiro
- University of California, Economics Department
Entstanden
- 2012
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