trinity_ppt

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Slide 1:

IMPOSSIBLE MACRO TRINITY – STRATEGY OF MANAGING CAPITAL FLOWS IN INDIA Presented by, Pavithra K K

THE IMPOSSIBLE TRINITY:

THE IMPOSSIBLE TRINITY The Impossible Trinity also known as the Inconsistent Trinity , Triangle of Impossibility or Unholy Trinity is the dilemma in international economics suggesting 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

Slide 3:

Free capital flows option 1 option 2 Independent monetary policy fixed exchange rate option 3

Strategy of managing capital flows:

Strategy of managing capital flows Allowing some appreciation in the currency Some unsterilized intervention Efforts to limit inflows at the margin

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