Search

US urges China to Ease Exchange Rate Controls


According to the Impossible Trinity Theorem, an economy cannot simultaneously have free capital mobility, fixed exchange rate and independent interest rate centred monetary policy. In other words, an economy open to capital flows (i.e. hot money, FDI) will have to choose between a regime of controlling interest rate OR exchange rate.

Currently, China is independently controlling interest rates and exchange rates due to restrictions on capital flows. That is, China is not an economy open to capital flows. If China were to ease control over exchange rate controls, China will eventually gravitate towards a floating exchange rate regime, free capital mobility and independent interest-rate centred monetary policy. This development could be decades away because China is still reliant on external demand and hence needs to maintain control over exchange rate.

To find out more about why China has to impose restrictions on capital flows due to the Impossible Trinity Theorem, do join our economics tuition classes or consult our economics tutor Mr. Clive Foo at econsactually@gmail.com.

The article can be found in the following link:

http://www.nytimes.com/2014/05/14/business/lew-urges-china-to-ease-controls-on-exchange-rate.html?_r=0


#economicstuition #economicstutor #impossibletrinity #fixedexchangerate #independentinterestratecentredmonetarypolicy #freecapitalmobility

AVAILABLE CLASS SCHEDULES 

ECONSACTUALLY WILL BE MOVING TOWARDS INTERACTIVE ONLINE LESSONS FROM 27 MARCH 2020 - 30 APRIL 2020. CALL TO ENQUIRE.

JC1 Economics Tuition

- SAT: 3:30PM - 5:30PM

- SUN: 10:00AM - 12:00PM

- SUN: 3:30PM - 5:30PM 

JC2 Economics Tuition

- TUE: 5:30PM - 7:30PM

- THURS: 4:30PM - 6:30PM

- FRI: 5:00PM - 7:00PM

- SAT: 10:00AM - 12:00PM

- SAT: 1:00PM - 3:00PM

- SUN: 1:00PM - 3:00PM

TOA PAYOH CENTRAL

BLK 72, TOA PAYOH LORONG 5, #01-578 - GROUND FLOOR UNIT

(5 mins walk from TPY MRT - Opposite Toa Payoh Central Library)

BEDOK CENTRAL

(2 mins walk from BEDOK MRT)

BUKIT TIMAH 

(3 mins walk from BEAUTY WORLD MRT)

WOODLANDS

(5 mins walk from WOODLANDS MRT)

LAKESIDE

(2 mins walk from LAKESIDE MRT)

T. (65) 93373874 

E. econsactually@gmail.com

 

  • Facebook - Black Circle
  • Instagram Social Icon

© ECONSACTUALLY 2019. ALL RIGHTS RESERVED.