NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

International Channels of Transmission of Monetary Policy and the Mundellian Trilemma

Hélène Rey

NBER Working Paper No. 21852
Issued in January 2016
NBER Program(s):   AP   IFM   ME

This lecture argues that the Global Financial Cycle is a challenge for the validity of the Mundellian trilemma. I present evidence that US monetary policy shocks are transmitted internationally and affect financial conditions even in inflation targeting economies with large financial markets. Hence flexible exchange rates are not enough to guarantee monetary autonomy in a world of large capital flows.

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Document Object Identifier (DOI): 10.3386/w21852

Published: Hélène Rey, 2016. "International Channels of Transmission of Monetary Policy and the Mundellian Trilemma," IMF Economic Review, vol 64(1), pages 6-35. citation courtesy of

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