Question

Does sterilization disprove the trilemma? Why or why not? Define sterilization in your answer.

Answer 1

No sterilization disapprove the trilemma due to following reason-

Sterilization not only disapprove the trilemma but also threatened that it will damage the monetary policy credibility as united states have stopped its its activities for intervention policy just because of the serious doubt of its effectiveness but there was regular complain from the federal open market committee for the United states monetary policy. Just because of uncertainty of sterilised intervention of monetary policy , central banks avoid its in major developed countries.

Define sterilization?

Sterilization refers to action taken the central banks of a country to counter the major effects of monetary policy caused due to balance of payments be it surplus or deficit