IMPOSSIBILE TRINITY IN EXPERIENCE OF COUNTRY IN TRANSITION

Abstract

The very few theories in modern economy are wider accepted than theorem of impossible trinity. Because of special conditions in country in transition (trade deficits very often are not responsive on change of real exchange rate, high level of country dept), we wished to check is this theory relevant for them. Our research shows that despite all limitations this theorem is very relevant, that impossible trinity is redused at binity (almost every CIT have been liberated capital movement), and that all countries, except countries at Balkans and Baltic prefer fluctuation exchange rate and independent monetary policy over the alternatives.