From Trilemma to Dilemma: Post-Bretton Woods World

Many argue that the concept of the trilemma, referring that out of independent monetary policy, free capital movement and fixed exchange rate regime only two can exist at the same time, is a potent tool to explore the effectiveness of monetary policy during the Bretton Woods (BW) regime and afterward. However, under this regime, besides capital controls, regulated domestic financial markets and diversity in central bank instruments contributed to the existence of the independent monetary policy. After the collapse of the BW system, capital controls were lifted, domestic financial markets were deregulated, remaining regulations were not implemented properly, and short-term interest rates became the sole instrument of central banks. The size of financial flows and financial markets has reached unprecedented levels. The effectiveness (either short- or long-term) of a central bank mainly depends on the institutional framework in which the central bank operates. Since there have been very dramatic changes in the intuitional structure enabling domestic and international financial markets to be much more decisive in determining asset prices and credit expansion, the ability of central banks in both developed and developing countries has weakened although this is much more apparent in developing countries. This process can be considered a gradual transition from trilemma to dilemma implying that under current conditions exchange rate regimes become relatively irrelevant for the effectiveness of central banks especially in developing countries. The unorthodox policies implemented after the global financial crisis in both advanced and developing countries can be considered an incomplete realization of the dilemma by central banks.


Keynesgil Finansal Düzenlemelerden Finansallaşmaya: iktisat Literatürü Ve ABD Ekonomisinin Finansallaşmasına Tarihsel Bir Bakış
Orhangazi, Özgür (Orta Doğu Teknik Üniversitesi (Ankara, Turkey), 2008-6)
Basta ABD ekonomisi olmak üzere hem merkez hem de çevre ülke ekonomilerinde finansal piyasaların, iliskilerin, kurumların ve islemlerin boyutları ve önemi özellikle son yirmi-yirmibes senede muazzam düzeyde arttı. Öyle ki, kapitalist sistemin su an içinde bulunduğu asamayı nitelemek için sıkça kullanılan küresellesme ve neoliberalizm kavramlarına bir üçüncüsü olarak ‘finansallasma’ eklendi. Bu makalede, Keynesgil birikim sürecinin çesitli kural ve kısıtlamalarla düzenlenmis finansal sisteminin yerini, gider...
A critical approach to central bank independence : the case of the central bank of the Republic of Turkey
Ayhan, Berkay; Üstüner, Mustafa Yılmaz; Department of Political Science and Public Administration (2008)
From the 1970s onwards, it is argued that central banks should be independent from politicians since the latter have an interest in seeking populist interventions to the conduct of the monetary policy. Additionally, it is often maintained that the sole aim of a central bank should be to seek price stability. Despite the seemingly neutral and objective tone of these arguments, central bank independence can find its meaning as a part of Neoliberalism, which restructured the economic administration of the stat...
From Washington consensus to global crises
İnan, Mutlu; Yalman, Osman Galip; Department of Political Science and Public Administration (2010)
This thesis focuses on the changing modes of state intervention into the economy in neoliberalism. It contends that the so called free market is neither a natural process nor an inevitable result of the harmony of interest, but the result of a deliberate political making process. The global economic crisis provided ample evidence to refute the claim that state and market are separately existing and antagonistic entities and indicates that the issue is not the market or the state, since the state in a capita...
An evaluation of the trilemma: global constraints on monetary policies of developing countries in the post Bretton Woods era
Tercioğlu, Remzi Barış; Cömert, Hasan; Department of Economics (2016)
This study investigates monetary policy independence of developing countries in the context of the trilemma concept in the post Bretton Woods Era. Throughout the thesis, multidirectional effects of financial flows on monetary policies of developing countries are described and limits on effectiveness of the policy rate tool are discussed. As empirical evidence shows, global factors restrict central bank independence in developing countries and the policy rate tool is not effective enough in influencing long-...
From precarious employment to precarious life : the case of non-appointed teachers in Turkey
Sağıroğlu, Seher; Erdoğan, Necmi; Department of Political Science and Public Administration (2013)
The debates on precarious employment and precarization of labor since the 1970s are significant to understand the neo-liberal transformation of labor market and socio-cultural analysis of the new forms of production relations. This study aims to contribute to the academic debates on the precarization and precarious employment by exploring the working and life conditions of non-appointed teachers in Turkey. Nowadays, the non-appointed teachers have faced with the precarious working conditions both in public ...
Citation Formats
H. Cömert, “From Trilemma to Dilemma: Post-Bretton Woods World,” presented at the InternationalConference on Economic Theory and Policy, 2016, 2016, Accessed: 00, 2021. [Online]. Available: