Two out of three ain’t bad
A fixed exchange rate, monetary autonomy and the free flow of capital are incompatible, according to the last in our series of big economic ideas
HILLEL THE ELDER, a first-century religious leader, was asked to summarise the Torah while standing on one leg. “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is commentary,” he replied. Michael Klein, of Tufts University, has written that the insights of international macroeconomics (the study of trade, the balance-of-payments, exchange rates and so on) might be similarly distilled: “Governments face the policy trilemma; the rest is commentary.”
This article appeared in the Schools brief section of the print edition under the headline “Two out of three ain’t bad”
Schools brief August 27th 2016
From the August 27th 2016 edition
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