m**c
发帖数: 7349 | 1 Both predicaments were a consequence of the macroeconomic policy trilemma,
also called the impossible trinity. It says a country must choose between
free capital mobility, exchange-rate management and an independent monetary
policy. Only two of the three are possibleBoth predicaments were a
consequence of the macroeconomic policy trilemma, also called the impossible
trinity. It says a country must choose between free capital mobility,
exchange-rate management and an independent monetary policy.
Only two of the three are possible. A country that wishes to fix the value
of its currency and also have an interest-rate policy that is free from
outside influence cannot allow capital to flow freely across its borders.
That was China’s trilemma.
If the exchange rate is fixed but the country is open to cross-border
capital flows, it cannot have an independent monetary policy. That was
Britain’s trilemma.
And if a country chooses free capital mobility and wants monetary autonomy,
it has to allow its currency to float. That is the two-from-three
combination that most modern economies choose.
To understand the trilemma, imagine a country that fixes its exchange rate
against the American dollar and is open to foreign capital. If in order to
bring down inflation its central bank sets interest rates above those set by
the Federal Reserve, this would attract foreign capital in search of higher
returns. That would in turn put upward pressure on the local currency.
Eventually the peg with the dollar would break. Equally, if interest rates
are cut below the federal funds rate, the exchange rate would fall as
capital left to seek higher returns in America. . A country that wishes to
fix the value of its currency and also have an interest-rate policy that is
free from outside influence cannot allow capital to flow freely across its
borders. That was China’s trilemma. If the exchange rate is fixed but the
country is open to cross-border capital flows, it cannot have an independent
monetary policy. That was Britain’s trilemma. And if a country chooses
free capital mobility and wants monetary autonomy, it has to allow its
currency to float. That is the two-from-three combination that most modern
economies choose.
To understand the trilemma, imagine a country that fixes its exchange rate
against the American dollar and is open to foreign capital. If in order to
bring down inflation its central bank sets interest rates above those set by
the Federal Reserve, this would attract foreign capital in search of higher
returns. That would in turn put upward pressure on the local currency.
Eventually the peg with the dollar would break.
Equally, if interest rates are cut below the federal funds rate, the
exchange rate would fall as capital left to seek higher returns in America. | m**c
发帖数: 7349 | 2 A country that wishes to fix the value of its currency and also have an
interest-rate policy that is free from
outside influence cannot allow capital to flow freely across its borders.
That was China’s trilemma |
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