Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64512 
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dc.contributor.authorAizenman, Joshuaen
dc.contributor.authorSengupta, Rajeswarien
dc.date.accessioned2011-11-02-
dc.date.accessioned2012-09-28T12:41:38Z-
dc.date.available2012-09-28T12:41:38Z-
dc.date.issued2011-
dc.identifier.urihttp://hdl.handle.net/10419/64512-
dc.description.abstractA key challenge facing most emerging market economies today is how to simultaneously maintain monetary independence, exchange rate stability and financial integration subject to the constraints imposed by the Trilemma, in the era of deepening globalization. In this paper we study the Trilemma choices of the two key drivers of global growth, China and India. We overview and contrast the policy choices of the two, and test their Trilemma choices and tradeoffs. China's Trilemma configurations are unique relative to the one characterizing other emerging markets in the predominance of exchange rate stability, and in the failure of the Trilemma regression to capture any significant role for financial integration. One possible interpretation is that the segmentation of the domestic capital market in China, its array of capital controls and the large hoarding of international reserves imply that the 'policy interest rate' does not reflect the stance of monetary policy. In contrast, the Trilemma configurations of India are in line with the regression results of other emerging countries, and are consistent with the predictions of the Trilemma tradeoffs. India like other emerging economies has overtime converged towards a middle ground between the three policy objectives, and has achieved comparable levels of exchange rate stability and financial integration buffered by sizeable international reserves.en
dc.language.isoengen
dc.publisher|aUniversity of California, Economics Department |cSanta Cruz, CAen
dc.relation.ispartofseries|aWorking Paper |x693en
dc.subject.jelE4en
dc.subject.jelE5en
dc.subject.jelF3en
dc.subject.jelF4en
dc.subject.ddc330en
dc.subject.keywordFinancial trilemmaen
dc.subject.keywordInternational reservesen
dc.subject.keywordForeign exchange interventionen
dc.subject.keywordMonetary policyen
dc.subject.keywordCapital account opennessen
dc.titleThe financial trilemma in China and a comparative analysis with India-
dc.typeWorking Paperen
dc.identifier.ppn671175823en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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