The Mundellian trilemma and optimal monetary policy in a world of high capital mobility (2021)
Type of ContentJournal Article
CitationFroyen RT, Guender A The Mundellian trilemma and optimal monetary policy in a world of high capital mobility. SSRN Electronic Journal.
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KeywordsMundellian Trilemma; policy independence; capital mobility; instrument shortage; capital controls
ANZSRC Fields of Research38 - Economics::3801 - Applied economics::380107 - Financial economics
38 - Economics::3801 - Applied economics::380112 - Macroeconomics (incl. monetary and fiscal theory)
35 - Commerce, management, tourism and services::3502 - Banking, finance and investment::350204 - Financial institutions (incl. banking)
35 - Commerce, management, tourism and services::3502 - Banking, finance and investment::350207 - International finance
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The Mundellian Trilemma and Optimal Monetary Policy in a World of High Capital Mobility Froyen R; Guender, Alfred (2022)This paper proposes that the Mundellian Trilemma remains valid despite the emergence of a world financial cycle. A clear distinction must be made between monetary policy independence and insulation of an open economy’s ...
International Evidence on the Role of Monetary Policy in the Uncovered Interest Rate Parity Puzzle Guender, A.V. (University of Canterbury. Department of Economics and Finance, 2015)CPI inflation targeting necessitates a flexible exchange rate regime. This paper embeds an endogenous target rule into a simple open economy macro model to explain the UIP puzzle. The model predicts that the change in the ...
CPI Inflation Targeting and the UIP Puzzle: An Appraisal of Instrument and Target Rules Guender, A.V. (College of Business and EconomicsUniversity of Canterbury. Department of Economics and Finance, 2011)Employing an optimizing framework, this paper shows that a target rule dominates a simple instrument rule when the focus of monetary policy is on CPI inflation. The target rule approach produces a systematic relationship ...