Bonga-Bonga, Lumengo (2024): Assessing the impossible trinity principle in BRICS grouping.
PDF
MPRA_paper_121839.pdf Download (227kB) |
Abstract
This paper makes a significant contribution to the literature on the policy trilemma by evaluating potential policy combinations that are relevant for the BRICS grouping within the context of the Impossible Trinity. Additionally, the paper introduces a new modeling approach for assessing the policy trilemma, based on establishing a boundary for the linear combination of variables related to the trilemma. The findings reveal that adopting a fixed exchange rate system presents considerable challenges for BRICS countries within the framework of the Impossible Trinity. Specifically, the results suggest that if BRICS countries opt for a fixed exchange rate system, they would likely have to forgo free capital flow. This loss of flexibility could be particularly detrimental, given their significant international influence and their role as major recipients of capital flows for trade and financial transactions.
Item Type: | MPRA Paper |
---|---|
Original Title: | Assessing the impossible trinity principle in BRICS grouping |
Language: | English |
Keywords: | impossible trinity; exchange stability; monetary policy independence; BRICS. |
Subjects: | C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance |
Item ID: | 121839 |
Depositing User: | Prof Lumengo Bonga-Bonga |
Date Deposited: | 31 Aug 2024 10:34 |
Last Modified: | 31 Aug 2024 10:34 |
References: | Aizenman, J., Chinn, M. D., and Ito, H. (2011). Surfing the waves of globalization: Asia and financial globalization in the context of the trilemma. Journal of the Japanese and International Economies, 25(3), 290-320. Aizenman J. and Ito, H. (2012), Trilemma policy convergence patterns and output volatility, North American journal of economics and Finance 23, 269-285. Aizenman, J., & Ito, H. (2013). The “Impossible Trinity” Hypothesis in an Era of Global Imbalances: Measurement and Testing. Review of International Economics, 21(3), 447-458. Aizenman, J. (2019). A modern reincarnation of Mundell-Fleming's trilemma. Economic Modelling, 81, 444-454. Basri, M. C. and Sumartono, L. (2023). The impossibility of the impossible trinity? The case of Indonesia. Oxford Review of Economic Policy, 39(2), 341-355. Benazic M. and Kersan-Skabic, I. (2016), The determinants of exchange rate in Croatia, Eastern Journal of European Studies, vol.7, Issue1. Beckmann J. et al. (2017), The political economy of the impossible trinity, European Journal of Political Economy 47, 103-123. Gnagne, P. X., & Bonga-Bonga, L. (2020). The impact of exchange rate volatility on the security markets in BRICS economies. International Economics/Economia Internazionale, 73(1). Cheng, R. and Rajan, R. S. (2020). Monetary trilemma, dilemma, or something in between?. International Finance, 23(2), 257-276. Duggan, N., Hooijmaaijers, B., Rewizorski, M., and Arapova, E. (2022). Introduction:‘The BRICS, global governance, and challenges for South–South cooperation in a post-Western world’. International Political Science Review, 43(4), 469-480. Ihnatov, I., and Căpraru, B. (2014). The trilemma policies and macroeconomic volatility in Central and Eastern Europe. Procedia Economics and Finance, 15, 853-857. Goh S.K. (2009), Managing the Impossible Trinity: The Case of Malaysia. MPRA working paper no. 18094. Ho, T. T., and Ho, T. H. (2018). Operating the impossible trinity before and after the global financial crisis 2007-2008: Evidence in Vietnam. International Journal of Trade and Global Markets, 11(1-2), 40-49. Makhanya, K. C., Bonga-Bonga, L., & Manguzvane, M. M. (2024). Examining the Dependence Structure Between Carry Trade and Equity Market Returns in BRICS Economies. International Economic Journal, 38(2), 365-384. Majumder, S. B., and Nag, R. N. (2017). Policy Trilemma in India: Exchange rate stability, independent monetary policy and capital account openness. Global Economy Journal, 17(3), 20170012. Padhan, H., Sahu, S. K., and Dash, U. (2021). Non-linear analysis of international reserve, trade and trilemma in India. The Journal of Economic Asymmetries, 23, e00191. Pantelopoulos, G. (2021). Can Central Banks circumvent the impossible trinity within their operational frameworks? Theory and evidence. The World Economy, 44(7), 2041-2075. Steiner, A. (2017). Central banks and macroeconomic policy choices: Relaxing the trilemma. Journal of Banking & Finance, 77, 283-299. Trivedy, A., and Khatun, M. (2023). Importance of BRICS as a regional politics and policies. GeoJournal, 88(5), 5205-5220. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/121839 |