Possibility of A Dilemma
In the modern world, given the growth of trade in goods and services and the fast pace of financial innovation, it is possible that capital controls can often be evaded. In addition, capital controls introduce numerous distortions. Hence, there are few important countries with an effective system of capital controls, though by early 2010 there has been a movement among economists, policy makers and the International Monetary Fund back in favour of limited use. Lacking effective control on the free movement of capital, the Impossible Trinity asserts that a country has to choose between reducing currency volatility and running a stabilising monetary policy: it cannot do both. As stated by Paul Krugman in 1999:
| “ | The point is that you can't have it all: A country must pick two out of three. It can fix its exchange rate without emasculating its central bank, but only by maintaining controls on capital flows (like China today); it can leave capital movement free but retain monetary autonomy, but only by letting the exchange rate fluctuate (like Britain – or Canada); or it can choose to leave capital free and stabilize the currency, but only by abandoning any ability to adjust interest rates to fight inflation or recession (like Argentina today,). | ” |
Read more about this topic: Impossible Trinity
Famous quotes containing the words possibility of a, possibility of, possibility and/or dilemma:
“From a drop of water a logician could infer the possibility of an Atlantic or a Niagara without having seen or heard of one or the other.”
—Sir Arthur Conan Doyle (1859–1930)
“The world men inhabit ... is rather bleak. It is a world full of doubt and confusion, where vulnerability must be hidden, not shared; where competition, not co-operation, is the order of the day; where men sacrifice the possibility of knowing their own children and sharing in their upbringing, for the sake of a job they may have chosen by chance, which may not suit them and which in many cases dominates their lives to the exclusion of much else.”
—Anna Ford (b. 1943)
“Perhaps basketball and poetry have just a few things in common, but the most important is the possibility of transcendence. The opposite is labor. In writing, every writer knows when he or she is laboring to achieve an effect. You want to get from here to there, but find yourself willing it, forcing it. The equivalent in basketball is aiming your shot, a kind of strained and usually ineffective purposefulness. What you want is to be in some kind of flow, each next moment a discovery.”
—Stephen Dunn (b. 1939)
“Many women are surprised by the intensity of their maternal pull and the conflict it brings to their competing roles. This is the precise point at which many women feel the stress of the work/family dilemma most keenly. They realize that they may have a price to pay for wanting to be both professionals and mothers. They feel guilty for not being at work, and angry for being manipulated into feeling this guilt. . . . They don’t quite fit at home. They don’t quite fit at work.”
—Deborah J. Swiss (20th century)