01881cas a2200253 a 4500 AALejournalIMF018827 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484381618 1018-5941 BD-DhAAL BD-DhAAL Cavallino, Paolo. The Expansionary Lower Bound : Contractionary Monetary Easing and the Trilemma / Paolo Cavallino, Damiano Sandri. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We provide a theory of the limits to monetary policy independence in open economies arising from the interaction between capital flows and domestic collateral constraints. The key feature of our theory is the existence of an 'Expansionary Lower Bound' (ELB), defined as an interest rate threshold below which monetary easing becomes contractionary. The ELB can be positive, thus acting as a more stringent constraint than the Zero Lower Bound. Furthermore, the ELB is affected by global monetary and financial conditions, leading to novel international spillovers and crucial departures from Mundell's trilemma. We present two models under which the ELB may arise, the first featuring carry-trade capital flows and the second highlighting the role of currency mismatches. Mode of access: Internet Sandri, Damiano. IMF Working Papers; Working Paper ; No. 2018/236 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/236/001.2018.issue-236-en.xml IMF e-Library