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Thread: Nobel Prize in Economics Winner's Analysis

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    Nobel Prize in Economics Winner's Analysis

    Robert Mundell was awarded the 1999 Nobel Prize in economics “for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas.”

    For those who like to read, this is a great link explaining why Iraq will be moving the direction it is. It lines up with much of the other analysis that has been posted in this forum.

    A snip from the link says:

    "In thinking through all these issues of assigning tools to targets and of fixed versus floating exchange rates, Mundell pointed out the so-called incompatible trinity: (i) unregulated mobility of capital, (ii) a particular fixed exchange rate, and (iii) a particular price level. Mundell showed that, at most, only two of these can be achieved. This has become standard thinking among economists and policymakers. It means that a government that wants, say, to keep inflation low and allow free capital movement must settle for a floating exchange rate, which is what most governments now do most of the time."

    For the complete article:

    http://www.econlib.org/library/Enc/bios/Mundell.html

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    Thanks for the post.

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