Surfing the Waves of Globalization: Asia and Financial Globalization in the Context of the Trilemma

Abstract

With a focus on the Asian economies, the authors examine how policy configurations affect macroeconomic performances by using Aizenman et al.'s "trilemma indexes" that measure the extent of achievement in each of the trilemma's policy goals -- monetary independence, exchange rate stability, and financial openness. They find that the three policy choices matter for output volatility and the medium-term level of inflation.