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International channels of transmission of monetary policy and the Mundellian Trilemma


IMF Economic Review



Authors / Editors

Rey H


Publication Year



This is the Mundell-Fleming lecture given at the IMF on November 13, 2014. This lecture argues that the Global Financial Cycle is a challenge for the validity of the Mundellian trilemma. The paper presents evidence that U.S. monetary policy shocks are transmitted internationally and affect financial conditions even in inflation-targeting economies with large financial markets. Hence flexible exchange rates are not enough to guarantee monetary autonomy in a world of large capital flows.

Available on ECCH


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