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dc.contributor.authorAizenman, Joshuaen_US
dc.contributor.authorIto, Hiroen_US
dc.description.abstractWe examine the open macroeconomic policy choices of developing economies from the perspective of the economic 'trilemma' hypothesis. We construct an index of divergence of the three trilemma policy choices, and evaluate its patterns in recent decades. We find that the three dimensions of the trilemma configurations are converging towards a 'middle ground' among emerging market economies - managed exchange rate flexibility underpinned by sizable holdings of international reserves, intermediate levels of monetary independence, and controlled financial integration. Emerging market economies with more converged policy choices tend to experience smaller output volatility in the last two decades. Emerging markets with relatively low international reserves/GDP could experience higher levels of output volatility when they choose a policy combination with a greater degree of policy divergence. Yet this heightened output volatility effect does not apply to economies with relatively high international reserves/GDP holding.en_US
dc.publisherUniv. of California at Santa Cruz, Dep. of Economics Santa Cruz, Calif.en_US
dc.relation.ispartofseriesWorking Papers, UC Santa Cruz Economics Department 695en_US
dc.subject.keywordimpossible trinityen_US
dc.subject.keywordinternational reservesen_US
dc.subject.keywordfinancial liberalizationen_US
dc.subject.keywordexchange rate regimeen_US
dc.subject.stwGesamtwirtschaftliche Produktionen_US
dc.subject.stwAufstrebende Märkteen_US
dc.titleTrilemma policy convergence patterns and output volatilityen_US
dc.typeWorking Paperen_US
Appears in Collections:Working Papers, Economics Department, UC Santa Cruz

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