Michael Bordo and Harold James — Trilemmas in capital flows, and domestic and international order

The classic exchange rate trilemma presented a formulation for analysing the trade-offs between the incompatible macroeconomic goals of capital mobility and monetary autonomy within a fixed exchange rate regime. This column shows how policy trilemma analysis can be extended to other domains, specifically financial stability, political economy, and international relations. It argues that analysing these trade-offs can help to identify policy options that balance macroeconomic objectives and political realities in the face of globalisation.

VoxEU.org

Trilemmas in capital flows, and domestic and international order
Michael Bordo, Professor of Economics, Rutgers University, and Harold James, Professor of History and International Affairs and the Claude and Lore Kelly Professor of European Studies, Princeton University and CIGI Senior Fellow