provides policy-relevant lessons. International spillovers of monetary policy and risk sentiment through global liquidity … strains during stress events. Country-specific policy challenges, summarized by the monetary and financial trilemmas, are …

We assess the empirical validity of the trilemma (or impossible trinity) in the 2000s for a large sample of advanced … and emerging economies. To do so, we estimate Taylor-rule type monetary policy reaction functions, relating the local … policy rate to real-time forecasts of domestic fundamentals, global variables, as well as the base-country policy rate. In …