The Impossible trinity (also known as the Trilemma) is a trilemma in international economics which states that it is impossible to have all three of the following at the same time:
- A fixed exchange rate.
- Free capital movement (absence of capital controls).
- An independent monetary policy.
It is both a hypothesis based on the Uncovered interest rate parity condition, and a finding from empirical studies where governments which have tried to simultaneously pursue all three goals have failed.
Read more about Impossible Trinity: Theoretical Derivation, Trilemma in Practice, Possibility of A Dilemma
Famous quotes containing the words impossible and/or trinity:
“Hygiene is the corruption of medicine by morality. It is impossible to find a hygienest who does not debase his theory of the healthful with a theory of the virtuous.... The true aim of medicine is not to make men virtuous; it is to safeguard and rescue them from the consequences of their vices.”
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