Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com). © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 12 December 2019

Abstract and Keywords

The World Trade Organization is obviously concerned with trade policy, and this volume focuses on the ways it has operated in dealing with the highly contentious issues of multilateral trade liberalization, the shaping of rules and the balancing of interests, the creation of coalitions, and the nature of dispute resolution. How does the pursuit of free trade or multilateral trade connect with two other aspects of international economics, exchange rates and capital flows? The trade-off between fixed (or flexible) exchange rates, free (or controlled) movement of capital, and an active (or passive) domestic monetary policy forms the so-called ‘trilemma’ or ‘unholy trinity’ as set out in the Mundell-Fleming model. This article expands the discussion of the ‘trilemma’ to focus on the ‘inconsistent quartet’, thereby highlighting the trade-offs that have to be made between trade, exchange rates, capital controls, and domestic monetary policy. It discusses balance of payments, the inconsistent quartet and the gold standard before 1914, the inconsistent quartet between the two world wars, Bretton Woods, the development of floating exchange rates, and the great recession.

Keywords: World Trade Organization, free trade, monetary policy, trilemma, inconsistent quartet, exchange rates, capital controls, balance of payments, gold standard, Bretton Woods

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.