The Emerging Global Financial Architecture: Tracing and Evaluating New Patterns of the Trilemma Configuration
Chinn, Menzie D.
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The authors investigate how the trilemma policy mix affects economic performance in developing countries. They find that greater monetary independence can dampen output volatility, while greater exchange rate stability is associated with greater output volatility. Greater financial openness, when accompanied by a high level of financial development, reduces output volatility.