Should-Read: Maurice Obstfeld, Jonathan D. Ostry, and Mahvash S. Qureshi: Trilemma redux: Evidence from emerging market economies

Should-Read: Maurice Obstfeld, Jonathan D. Ostry, and Mahvash S. Qureshi: Trilemma redux: Evidence from emerging market economies: “The synchronous rise and fall of cross-border capital flows, domestic credit, and asset prices… http://voxeu.org/article/trilemma-redux-evidence-emerging-market-economies

…across countries has raised questions about the relevance of the exchange rate regime in a world of high capital mobility. This column presents evidence from emerging market economies, which shows that exchange rate regimes do matter. The transmission of global financial shocks to domestic financial and macro-economic conditions, as well as to capital flows, is magnified under fixed exchange rate regimes relative to more flexible regimes…