Impossible trinity, capital flow market and financial stability

Pak Hung MO*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    As observed by Calvo (2002), the world financial market is wrought with systemic hazards that are largely independent to the individual countries affected. Systemic problem requires systemic instrument. Based on the Mundell-Fleming model, we institute a capital flow market into an economy. After the additional market is introduced, countries can enjoy the benefits from opening their foreign exchange and capital markets but at the same time, be free from exchange rate volatility and financial crises as well as retain full autonomy in monetary and fiscal policies for maintaining internal balances. The 'globalization hazard' is resolved.

    Original languageEnglish
    Pages (from-to)611-618
    Number of pages8
    JournalKyklos
    Volume62
    Issue number4
    DOIs
    Publication statusPublished - Nov 2009

    Scopus Subject Areas

    • Arts and Humanities (miscellaneous)
    • Economics and Econometrics

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