NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility

Maurice Obstfeld, Jay C. Shambaugh, Alan M. Taylor

NBER Working Paper No. 10396
Issued in March 2004
NBER Program(s):   DAE   IFM

The exchange-rate regime is often seen as constrained by the monetary policy trilemma, which imposes a stark tradeoff among exchange stability, monetary independence, and capital market openness. Yet the trilemma has not gone without challenge. Some (e.g., Calvo and Reinhart 2001, 2002) argue that under the modern float there could be limited monetary autonomy. Others (e.g., Bordo and Flandreau 2003), that even under the classical gold standard domestic monetary autonomy was considerable. This paper studies the coherence of international interest rates over more than 130 years. The constraints implied by the trilemma are largely borne out by history.

download in pdf format
   (239 K)

email paper

This paper is available as PDF (239 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10396

Published: Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2005. "The Trilemma in History: Tradeoffs Among Exchange Rates, Monetary Policies, and Capital Mobility," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 423-438, December. citation courtesy of

Users who downloaded this paper also downloaded these:
Frankel w7338 No Single Currency Regime is Right for All Countries or At All Times
Calvo and Reinhart w7993 Fear of Floating
Obstfeld and Taylor w5960 The Great Depression as a Watershed: International Capital Mobility over the Long Run
Aizenman, Chinn, and Ito w14533 Assessing the Emerging Global Financial Architecture: Measuring the Trilemma's Configurations over Time
Reinhart and Rogoff w8963 The Modern History of Exchange Rate Arrangements: A Reinterpretation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us