The “Impossible Trinity” in Monetary Policy of Armenia


  • Edward Sandoyan Director of the Institute of Economics and Business Russian-Armenian University
  • Lidia Davoyan Senior Lecturer , Russian-Armenian University



Exchange rate, Monetary policy, “Impossible Trinity”/ “The Mundell-Fleming Trilemma”, Economic growth, Emerging economies, Inflation targeting


This article reviews some of the key aspects of exchange rate and monetary policy choices with reference to developing countries. It analyses also the “the impossible trinity” in theory and practice of emerging markets, its specificity in the monetary policy of Armenia. The study finds that the floating exchange rate is optimal when combined with an active monetary policy in the case of emerging economies. Also the results suggest the necessity of a changing of orientation of the monetary policy of Armenia: it must contribute to economic growth rather than to be the means of a fight against inflation. The policy of maintaining a low level of inflation, aimed at squeezing the money supply and credit, impedes economic growth, export expansion and makes the system less resistant to external shocks. Then what monetary and exchange rate policy should follow Armenia in today's realities, taking into account the integration processes within the framework of EAEC? Just to these problems this article is devoted.


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How to Cite

Sandoyan, E., & Davoyan, L. (2017). The “Impossible Trinity” in Monetary Policy of Armenia. Journal Transition Studies Review, 24(1), 3-14.