1 / 7

The Impossible Trinity and Constraints on Policy options

The Impossible Trinity and Constraints on Policy options. Reserve Bank of India First International Research Conference February 12-13 2010. Irma Rosenberg Board Member of Swedish National Debt Office. The impossible trinity. Out of the 3 objectives Free capital mobility

pahana
Download Presentation

The Impossible Trinity and Constraints on Policy options

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Impossible Trinity and Constraints on Policy options Reserve Bank of India First International Research Conference February 12-13 2010 Irma Rosenberg Board Member of Swedish National Debt Office

  2. The impossible trinity Out of the 3 objectives • Free capital mobility • Exchange rate stability • Monetary independence policy makers can choose only 2

  3. Emerging Market Countries:Exchange Rate Regimes 1991, 1999 and 2006 56% (22) 49% (19) 46% (18) 41% (16) 36% (14) 36% (14) 15% (6) 13% (5) 8% (3) Note: Number of countries in parenthesis Source: Fisher (2008), IMF

  4. The Trilemma Choices in Asia Financial Exhange rate Monetary policy openness* regime regime China 1 Managed Stability of val. of currency Hong Kong 0 Fixed Currency board India 1 Managed float Price stability and adequate credit supply Indonesia 1 Managed float Inflation target 2005 Korea 1 Float Inflation target 1998 Malaysia 1 Managed float Price stability/sustainable growth Phillipines 1 Managed float Inflation target 2002 Singapore 0 Managed Price stability (intermediate target) Thailand 1 Managed float Inflation target 2000 Note IMF Index 2005, 1= restrictions 0= no restrictions Source: Hannoun (2007) and central bank webs

  5. Sweden Inflation expectations well anchoredAnnual percentage change Note. Refers to money market participants. Sources: TNS Sifo Prospera and Statistics Sweden

  6. Sweden Inflation has fallen remarkablyCPI, annual percentage change Fixed exchange rate Floating exchange rate and inflation targetting Sources: Statistics Sweden and the Riksbank

  7. Sweden Growth is higherGDP, annual percentage change Floating exchange rate and inflation targetting Fixed exchange rate Source: Statistics Sweden

More Related