When central bank’s governor Nguyen Van Binh cited a famous economic theory and claimed he could deserve half a Nobel Prize, many delegates laughed.
However, it later turned out the governor who holds a Phd in economics from Russia used the trilemma theory in a wrong way, which could indicate he either is ignorant or just used it to shun responsibility.
After being criticized for SBV’s tightened monetary policies at a National Assembly’s (NA) Q&A session last week, Dr. Binh cited the trilemma theory to try to conclude that it was not his fault.
Binh said the SBV’s polices faced the problem of the "impossible trinity" or trilemma theory in economics, which states that monetary policies cannot be deployed in order to control inflation, maintain growth and stabilize the exchange rate at the same time.
"The theorist of the “impossible trinity" won a Nobel Prize for his discovery. But in Vietnam, SBV’s task is to curb inflation and maintain a high growth rate at the same time.”
“I once joked with the NA chairman that if I can do one of these well, I only need half of the Nobel Prize," Binh said.
But Robert Mundell won a Nobel Prize in economics in 1999 for his pioneering work in monetary dynamics and optimum currency areas, not the "impossible trinity”, Professor Tran Ngoc Tho from the Ho Chi Minh City of Economics told Thoi Bao Kinh Te Saigon.
Worse, Nguyen Tri Dung, a member of the macroeconomic policy advising group under the NA Economic Committee of the National Assembly, said Binh didn’t understand the theory.
The governor cited three factors as growth, inflation and the exchange rate, adding that it is impossible to simultaneously accomplish the three goals but in fact the theory refers to the three objectives: fixed exchange rate, national independence in monetary policy, and capital mobility. Inflation and growth are not included in the said theory.
“As such, there are two possibilities: the governor doesn’t understand exactly the theory, or trying to get sympathy to dodge the question of the NA delegate”, Dung added.
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