{
  "title": "Trinity Strikes Back: Monetary Independence and Inflation in the Caribbean",
  "publication": "IMF Working Papers, September 20, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/09/20/trinity-strikes-back-monetary-independence-and-inflation-in-the-caribbean-48599",
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  "summary": "Monetary independence is at the core of the macroeconomic policy trilemma stating that an independent monetary policy, a fixed exchange rate and free movement of capital cannot exist at the same time.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Title: Trinity Strikes Back: Monetary Independence and Inflation in the Caribbean\n- Authors: Serhan Cevik, Tianle Zhu\n- Date: September 20, 2019\n- Study period: 1980–2017\n- Core question: Relationship between monetary autonomy and inflation dynamics in a panel of Caribbean countries.\n- Key definition: Monetary independence is measured as a country’s ability to conduct its own monetary policy for domestic purposes independent of external monetary influences.\n- Main methodological note: Results are robust to alternative specifications and estimation methodologies."
    },
    {
      "heading": "Empirical findings",
      "content": "- Greater monetary policy independence leads to lower consumer price inflation.\n- Monetary independence is a significant factor in determining inflation, even after controlling for macroeconomic developments.\n- The relationship between monetary independence and inflation is robust to alternative specifications and estimation methodologies.\n- Contextual emphasis: Findings are especially relevant for countries that maintain pegged exchange rates relative to the U.S. dollar, given the critical bearing of such pegs on monetary autonomy."
    },
    {
      "heading": "Policy implications and relevance",
      "content": "- Monetary autonomy matters for inflation outcomes; policymakers should consider the trade-offs implied by the macroeconomic policy trilemma (an independent monetary policy, a fixed exchange rate, and free movement of capital cannot coexist).\n- For Caribbean countries with pegs to the U.S. dollar, the loss of monetary autonomy associated with pegged exchange rates has clear implications for domestic inflation control.\n- The study’s results carry direct policy relevance for central bank design and exchange rate arrangements in the region."
    },
    {
      "heading": "Key statistics and publication metadata",
      "content": "- Pages: 19\n- Volume: 2019\n- Issue: 197\n- Series: Working Paper No. 2019/197\n- DOI: https://doi.org/10.5089/9781513511702.001\n- Stock No: WPIEA2019197\n- ISBN: 9781513511702\n- ISSN: 1018-5941\n\nSource: Serhan Cevik and Tianle Zhu, \"Trinity Strikes Back: Monetary Independence and Inflation in the Caribbean\", IMF Working Papers 2019, 197 (2019).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/09/20/trinity-strikes-back-monetary-independence-and-inflation-in-the-caribbean-48599"
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    "Authors: Serhan Cevik, Tianle Zhu",
    "Published: September 20, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513511702.001",
    "Title: Trinity Strikes Back: Monetary Independence and Inflation in the Caribbean",
    "Authors: Serhan Cevik, Tianle Zhu",
    "Date: September 20, 2019",
    "Study period: 1980–2017",
    "Core question: Relationship between monetary autonomy and inflation dynamics in a panel of Caribbean countries.",
    "Key definition: Monetary independence is measured as a country’s ability to conduct its own monetary policy for domestic purposes independent of external monetary influences.",
    "Main methodological note: Results are robust to alternative specifications and estimation methodologies.",
    "Greater monetary policy independence leads to lower consumer price inflation.",
    "Monetary independence is a significant factor in determining inflation, even after controlling for macroeconomic developments.",
    "The relationship between monetary independence and inflation is robust to alternative specifications and estimation methodologies.",
    "Contextual emphasis: Findings are especially relevant for countries that maintain pegged exchange rates relative to the U.S. dollar, given the critical bearing of such pegs on monetary autonomy.",
    "Monetary autonomy matters for inflation outcomes; policymakers should consider the trade-offs implied by the macroeconomic policy trilemma (an independent monetary policy, a fixed exchange rate, and free movement of capital cannot coexist).",
    "For Caribbean countries with pegs to the U.S. dollar, the loss of monetary autonomy associated with pegged exchange rates has clear implications for domestic inflation control.",
    "The study’s results carry direct policy relevance for central bank design and exchange rate arrangements in the region.",
    "Pages: 19",
    "Volume: 2019",
    "Issue: 197",
    "Series: Working Paper No. 2019/197",
    "DOI: https://doi.org/10.5089/9781513511702.001",
    "Stock No: WPIEA2019197",
    "ISBN: 9781513511702",
    "ISSN: 1018-5941",
    "**Working Paper**"
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