TY  - JOUR
AU  - Obstfeld,Maurice
AU  - Shambaugh,Jay C.
AU  - Taylor,Alan M.
TI  - The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10396
PY  - 2004
Y2  - March 2004
UR  - http://www.nber.org/papers/w10396
L1  - http://www.nber.org/papers/w10396.pdf
N1  - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu

Jay C. Shambaugh
McDonough School of Business
Georgetown University
542 Hariri
Washington, DC 20057
Tel: 202/687-6625
E-Mail: jcs264@georgetown.edu

Alan M. Taylor
Department of Economics
University of Virginia
Monroe Hall
Charlottesville, VA 22903
Fax: (434) 982-2904
E-Mail: alan.m.taylor@virginia.edu
AB  - 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.
ER  -