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Abstract In a unified framework comprising 33 diverse economies, this study investigates the role of flexible exchange rate regime vis-a-vis capital controls in providing insulation against monetary autonomy impairment. We… Click to show full abstract
Abstract In a unified framework comprising 33 diverse economies, this study investigates the role of flexible exchange rate regime vis-a-vis capital controls in providing insulation against monetary autonomy impairment. We find both of them to be equally effective. We also investigate the debate between the Mundellian “trilemma” and the “duo”. Our findings show that in the presence of capital openness, the flexible exchange rates restrict autonomy impairment only at the shorter horizon of 3 months, not at the longer horizon of 12 months.
Journal Title: Economics Letters
Year Published: 2019
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