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Document Type

Journal Article

Department/Unit

Department of Economics

Title

Impossible trinity, capital flow market and financial stability

Language

English

Abstract

As observed by Calvo (2002), the world financial market is wrought with systemic hazards that are largely independent to the individual countries affected. Systemic problem requires systemic instrument. Based on the Mundell-Fleming model, we institute a capital flow market into an economy. After the additional market is introduced, countries can enjoy the benefits from opening their foreign exchange and capital markets but at the same time, be free from exchange rate volatility and financial crises as well as retain full autonomy in monetary and fiscal policies for maintaining internal balances. The 'globalization hazard' is resolved. © 2009 Blackwell Publishing Ltd.

Publication Date

2009

Source Publication Title

Kyklos

Volume

62

Issue

4

Start Page

611

End Page

618

Publisher

Wiley

ISSN (print)

00235962

ISSN (electronic)

14676435

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