The Impossible Trinity doctrine still holds a powerful sway over policymakers, advisors (particularly the International Monetary Fund [IMF]) and academia. In East Asia over the past decade, however, most countries have been able to maintain open capital markets, monetary policy independence, and...

While the initial certainty and stark simplicity of the Impossible Trinity have fuzzed and softened over time, this idea still holds a powerful sway over analysis of exchange rates and in the policy debate on capital flows. Yet the practical evidence suggests that the constraints on policy...

Since the 1980s, emerging countries have been urged to welcome foreign capital inflows. The result has often been a pattern of surges, where excessive inflows were followed by damaging 'sudden stops' and reversals. What is needed is a strategy that makes use of the potential benefits of capital...