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Title: International Channels of Transmission of Monetary Policy and the Mundellian Trilemma

Author(s): Hélène Rey

Publication Date: December 2015

Keyword(s): Global Financial Cycle, Monetary Policy and Trilemma

Programme Area(s): Financial Economics, International Macroeconomics and Finance and Monetary Economics and Fluctuations

Abstract: This lecture argues that the Global Financial Cycle is a challenge for the validity of the Mundellian trilemma. I present evidence that US 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.

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Bibliographic Reference

Rey, H. 2015. 'International Channels of Transmission of Monetary Policy and the Mundellian Trilemma'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11027