Answer to Question #246284 in Macroeconomics for KAY

Question

In his article, "The Global Capital Market: Benefictor or Menace?", Maurice Obfeld

the concept of an Open-Economy Trilemma to interpret the evolution of the international financial system. Which trilemma is this. How does it help to explain the evolution of theinternational financial system?

Answer 1

This paper surveys the hypothetical capacities, history, and strategy issues raised by the global capital market. The objective is to offer a point of view on both the extensive benefits the market offers and on the authentic perils it presents, just as on roads through which it compels public arrangement decisions. A duality of advantages and dangers is inevitable in genuine unbalanced data and defective agreement authorization. The creator contends, in any case, that, in defying the worldwide capital market, the best approach to expand net advantages is to support monetary joining while at the same time assaulting attending twists and undesirable incidental effects at, or near, their sources.