International Channels of Transmission of Monetary Policy and the Mundellian Trilemma
44 Pages Posted: 12 Jan 2016
There are 2 versions of this paper
International Channels of Transmission of Monetary Policy and the Mundellian Trilemma
NBER Working Paper No. w21852
Number of pages: 43
Posted: 12 Jan 2016
Last Revised: 18 Mar 2023
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Date Written: December 2015
Abstract
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.
Keywords: Global Financial Cycle, Monetary Policy, Trilemma
JEL Classification: F33, F41, F42
Suggested Citation: Suggested Citation
Rey, Helene, International Channels of Transmission of Monetary Policy and the Mundellian Trilemma (December 2015). CEPR Discussion Paper No. DP11027, Available at SSRN: https://ssrn.com/abstract=2714267
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