Talk:Impossible trinity

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Capital controls

Is there any evidence, or citation for the assertion that capital controls are "easily evaded?" DOR (HK) (talk) 09:19, 11 February 2009 (UTC)[reply]

Easy to find citations on this, although not accepted as a universal truth. See article summary here or another here ("Empirical evidence, however, generally challenges belief in the effectiveness of capital controls"), here, and here. Google can find many more, google scholar no doubt too. But the "empirical evidence generally challenges belief in effectiveness" summarizes pretty well (and then economists try to figure out in exactly which circumstances).--Gregalton (talk) 07:58, 12 February 2009 (UTC)[reply]

What about China & India?

The statement "Hence, there is virtually no important country which has an effective system of capital control" seems to contradict the information given on Renminbi page that China (and India?) has maintained capital controls, particularly in light of the 1998 Asian Crisis. Helvetius (talk) 12:58, 16 October 2009 (UTC)[reply]

This quote (no important country which has effective capital control) is ridiculous. Unless we are holding "capital control" to some impossible platonic standard, we see clear examples of at least relatively successful (very successful, I would argue) capital controls in India and China. Consider the domestic debt markets of these nations - domestic bonds are so incredibly difficult for foreigners to buy that the JPMorgan GBI-EM Index Global REMOVES India and China from the index entirely as they are impossible to access for international investors. I'm pretty sure the fact that even JP Morgan considers this market completely off-limits to even the most powerful, wealthy investors shows quite well that capital is, in fact, controlled quite strongly for two undeniably "important" countries.

Title

Should this article be under "Impossible trinity" or under "Trilemma (economics)"?VolunteerMarek 19:09, 26 February 2012 (UTC)[reply]

Error in illustration

The new SVG version of the figure is pretty, but misspells "Monetary". I'd fix it if I had the tools. Anyone else? 170.140.151.59 (talk) 16:10, 27 April 2012 (UTC)[reply]

Violation of Impossible Trinity

1. Independent monetary policy allows for a central bank to either perform open market operations OR set an interest rate (typically overnight discount rate) by decree. One presumes the existence of bonds the central bank can buy and sell, the other does not.

2. Capital controls are limitations placed on currency flows into and out of a country. Basically they are limitations on what a nonresident private investor can buy. But do they also consist of limitations on the realized value that can be obtained by a nonresident? In one case there is denied market access (cannot purchase asset), in the other there is denied production access (cannot realize value from asset that is purchased).

3. Fixed exchange rate. If capital controls are limitations only on what can be purchased, then a country can stabilize its exchange range by selling assets that have a high difference in value between resident and non-resident buyers. In essence, a fiscal authority is able to withdraw liquidity to counter an influx of foreign investment.