Japan’s more than a decade long “Great Recession†has presented a disconcerting case of what could happen if interest rates are bounded by zero and deflation sets in. Since Krugman (1998), the commonplace observation is that the deflationary situation combined with the zero...

Using the “trilemma indexes†developed by Aizenman et al. (2010) that measure the extent ofachievement in each of the three policy goals in the trilemma—monetary independence, exchange ratestability, and financial openness—we examine how policy configurations affect...

This paper investigates the link between capital account openness and the output cost associated with a currency crisis. Although the Malaysian experience during the Asian crisis of 1997-98 made many researchers and policy makers interested in the effectiveness of a policy restricting...

We examine the open macroeconomic policy choices of developing economies from the perspectiveof the economic “trilemma†hypothesis. We construct an index of divergence of the threetrilemma policy choices, and evaluate its patterns in recent decades. We find that the threedimensions of...

We develop a methodology that intuitively characterizes the choices countries have made with respect to the trilemma during the post Bretton-Woods period. The paper first outlines the new metrics for measuring the degree of exchange rate flexibility, monetary independence, and capital account...

We extend our work (Chinn and Ito, 2002) focusing on the links between capital account liberalization, legal and institutional development, and financial development, especially that in equity markets. In a panel data analysis encompassing 108 countries and twenty years ranging from 1980 to...