The Mundell-Fleming Trilemma Combination on Middle-Income Countries

Authors

Rinny Apriliany Zakaria, Faculty of Economics and Business, Brawijaya University, IndonesiaFollow
Ghozali Maski, Faculty of Economics and Business, Brawijaya University, IndonesiaFollow
Putu Mahardika Adi Saputra, Faculty of Economics and Business, Brawijaya University, IndonesiaFollow
Ahmed Mohamed Annegrat, Faculty of Economics, University of Bani Waleed, LibyaFollow

Abstract

A country with a small open economy is unlikely to simultaneously achieve monetary independence, exchange rate stability, and financial integration. In Mundell Fleming's trilemma hypothesis, the three goals are trade-offs. Therefore, this study aims to identify the combination of the Mundell Fleming trilemma in middle-income countries from 1995 to 2017 with the panel Autoregressive Distributed Lag (ARDL) model. This estimation method will provide an overview of the combination of Mundell Fleming's trilemma in the short and long term. The results of this study indicate that the Mundell-Fleming trilemma tends to converge in the short run. While on the long run, middle-income countries tend to choose monetary independence and financial integration, resulting in a less stable exchange rate, as mentioned in the hypothesis

First Page

50

Last Page

59

Recommended Citation

Zakaria, Rinny Apriliany; Maski, Ghozali; Saputra, Putu Mahardika Adi; and Annegrat, Ahmed Mohamed (2025) "The Mundell-Fleming Trilemma Combination on Middle-Income Countries," Jurnal Ekonomi dan Studi Pembangunan: Vol. 15: No. 1, Article 7.
Available at: https://citeus.um.ac.id/jesp/vol15/iss1/7