According to the impossible trinity, it is not possible to simultaneously have 1) a fixed exchange rate
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Question:
According to the "impossible trinity," it is not possible to simultaneously have 1) a fixed exchange rate regime, 2) perfect capital mobility, and 3) an independent monetary policy. Based on the Mundell-Fleming model of exchange rate determination with fixed prices, demonstrate that the impossible trinity holds?
In your answer, could you please explain how the impossible trinity is not the same as saying that Mundell-Fleming model of exchange rate determination, a monetary expansion can occur under fixed exchange rates and perfect capital mobility?
Related Book For
Applied Regression Analysis and Other Multivariable Methods
ISBN: 978-1285051086
5th edition
Authors: David G. Kleinbaum, Lawrence L. Kupper, Azhar Nizam, Eli S. Rosenberg
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