Managing The Trilemma: The Case of Malaysia

Authors

  • Goh Soo Khoon Centre for Policy Research and International Studies Universiti Sains Malaysia

Abstract

This paper discusses how Malaysia manages the trilemma, the conjecture that a country cannot simultaneously maintain an open capital account, an exchange rate stability, and monetary policy independence. Only two out of these three goals can be mutually consistent and policy makers have to decide which third goal to give up. The paper shows how Malaysia adopts an intermediate regime – a regime that enables policy makers to manage all the three goals simultaneously. The impact of the global financial crisis on the Malaysian economy and the policy options for Malaysia to deal with the recent huge capital outflows are discussed in this paper. The willingness by Bank Negara Malaysia to allow a certain extent of exchange rate adjustments in the face of current global crisis reflects that Malaysia is not exempted from the trilemma.

 

Additional Files

Published

28-02-2010

How to Cite

Khoon, G. S. (2010). Managing The Trilemma: The Case of Malaysia. International Journal of Management Studies, 17, 15–33. Retrieved from https://e-journal.uum.edu.my/index.php/ijms/article/view/10185