Trilemma Triangle and Macroeconomic Policy Preferences in Turkey

Tümtürk, Oğuz

doi:10.33630/ausbf.523286

Cited by 2 publications

(2 citation statements)

References 25 publications

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“…The macroeconomic studies viz. Aizenman & Ito (2011), Majumder and Nag (2021), Patoria (2020), Tümtürk (2019), Çörtük and Singh (2013) and Taguchi et al . (2011) proved that the accumulation of international reserves weakens the strength of impossible trinity; this is known as the quadrilemma framework to weaken the impossible trinity.…”

Section: Empirical Analysismentioning

confidence: 99%

“…The results confirmed the presence of impossible trinity in both the developing and developed countries. Islam (2019), Tümtürk (2019) and Klein and Shambaugh (2015) also concluded the impossible trinity is valid. Ihnatov and Căpraru (2014) examined the effects of impossible trinity policies on macroeconomic variables in selected Central and Eastern Europe Counties (CEEC).…”

Section: Introductionmentioning

confidence: 99%

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Which Combination of Impossible Trinity Choices Ensures Output and Price Stabilities in India? A Sign‐Restricted Vector Autoregressive Analysis

Arora

Malik

Arora

2022

J of App Econs and Policy

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India has faced the impossible trinity challenge after it opened up its capital account post-1990s reforms. Accordingly, simultaneous achievement of three macroeconomic objectives, namely exchange Rate Stability, capital openness and monetary independence, is an impossible task and any combination of two objectives can be achieved by losing the third one. This attempt, therefore, validates the existence of impossible trinity in India and investigates its impact on the stability of both, economic growth and prices. The signrestricted vector autoregressive (VAR) methodology has been used to confirm the existence of impossible trinity and to identify the best trilemma policy combination for the Indian economy in order to achieve stable output growth with steady prices. A trinity combination of "capital openness" and "exchange rate stability" is found to be the best in achieving stability of macroeconomic indicators under evaluation. Furthermore, the absence of trinity in India is inferred to ensure macroeconomic stability. However, maintaining its absence for a substantial period is noticed to be a nearimpossible task.

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Section: Empirical Analysismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Which Combination of Impossible Trinity Choices Ensures Output and Price Stabilities in India? A Sign‐Restricted Vector Autoregressive Analysis

Arora

Malik

Arora

2022

J of App Econs and Policy

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Türkiye Ekonomisi için Ekonometrik Bir Model Çalışması- Mundell-Fleming Modeli Çerçevesinde Bir İnceleme

BAŞTAV

2022

Fiscaoeconomia

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In economic theory there is some general belief that General Equilibrium model is based on stronger theoretical pillars, whereas Keynesian models are better in empirical predictions especially for the developing countries. The MFM has shaped analytical thinking becoming the basic template during the 1960-70s as an extension of the IS-LM analysis to the open economy. Recent research on the model highly concentrates on the Trilemma Hypothesis which suggests that it is not possible to have all three of the stable exchange rate, monetary independence and financial integration policy choices together. Studies on world economies from 1820 on provide strong evidence supporting the theory. Previously extended form of the MFM has been estimated in Baştav (2006) in seven equations by the Johansen test for 1990-2002. There are goods, money, foreign exchange, labor markets with demand-supply equations as well as wage indexation and price level specifications on the supply side. The model allows for price and wage adjustment and there are altogether four price variables with the interest and the exchange rates. Present study is an update of the model for the years 2003-2021 to test its validity for the new period. Results are quite explanatory for 1990s and 2000s in both studies with particular deviations in behavioral traits and coefficients naturally stemming from differences in policy choice during the two periods in question.

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Trilemma Triangle and Macroeconomic Policy Preferences in Turkey

Cited by 2 publications

References 25 publications

Which Combination of Impossible Trinity Choices Ensures Output and Price Stabilities in India? A Sign‐Restricted Vector Autoregressive Analysis

Which Combination of Impossible Trinity Choices Ensures Output and Price Stabilities in India? A Sign‐Restricted Vector Autoregressive Analysis

Türkiye Ekonomisi için Ekonometrik Bir Model Çalışması- Mundell-Fleming Modeli Çerçevesinde Bir İnceleme

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