Assessing Reserve Adequacy in Low-Income Countries / Valerio Crispolti, Era Dabla-Norris, Jun Kim, Kazuko Shirono, George Tsibouris.

Format:

Book

Government document

Author/Creator:

Crispolti, V. (Valerio)

Contributor:

Dabla-Norris, Era.

Kim, Jun.

Shirono, Kazuko.

Tsibouris, George.

International Monetary Fund, Content Provider.

Series:

Occasional Papers; Occasional Paper ; No. 2013/002

Occasional Papers

Language:

English

Subjects (All):

Foreign exchange reserves--Developing countries.

Foreign exchange reserves.

Physical Description:

1 online resource (78 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2013.

Language Note:

English

Summary:

Low-income countries routinely experience exogenous disturbances—sharp swings in the terms of trade, export demand, natural disasters, and volatile financial flows—that contribute to higher volatility in aggregate output and consumption compared with other countries. Assessing Reserve Adequacy in Low-Income Countries presents the findings of an analysis of a range of external shocks faced by these countries, beginning with a discussion of the impact of external shocks on macroeconomic growth, volatility, and welfare. Although sound macroeconomic and prudential policy frameworks are the first line of defense for limiting vulnerability, international reserves constitute the main form of self-insurance against such shocks. The evidence suggests that low-income countries with reserve coverage above three months of imports were better able to smooth consumption and absorption in the face of external shocks compared with those with lower reserve holdings. The analysis also points to the importance of country characteristics and vulnerabilities in assessing reserve adequacy.

Contents:

Cover; Contents; Preface; 1. Introduction; 2. External Shocks and Macroeconomic Performance; Tables; 2.1. Frequency of Shocks Across Country Groups (1970-2007); Figures; 2.1. Distribution of Country Characteristics among Low-Income Countries and the Rest of the World; Consequences for Growth and Welfare; 2.2. Growing Integration between Low-Income Countries and the Global Economy; 2.3. Macroeconomic Volatility in Low-Income Countries, 1980-2009; 3. Anatomy of External Shocks in Low-Income Countries; Event Study Analysis; 3.1. Definition of Shock Episodes; Shock Frequency and Size

3.2. Identifying the Cost Associated with a ShockMacroeconomic Impact of External Shocks (1980-2007); 3.1. Frequency and Size of Shocks; 3.2. Frequency and Size of Shocks by Region; 3.3. Macroeconomic Impact of Terms-of-Trade Shocks; 3.4. Macroeconomic Impact of Shocks by Structural Characteristics; 3.5. Costs by Shock Type; The Role of International Reserves; 3.6. Costs by Shock Type and Structural Characteristics; 3.7. Annual Losses and Level of Reserves; 3.8. Costs of External Shocks by Variable and Type of Shock; 3.9. Absorption Costs of External Shocks by Reserve Coverage

The Global Financial Crisis (2007-10)3.10. Costs of External Shocks by Structural Characteristics of the Economy; 3.11. Macroeconomic Impact of the Crisis; 3.12. Macroeconomic Impact of the Crisis by Level of Reserves; 3.13. Macroeconomic Performance by Level of Reserves and Structural Characteristics; 4. Stylized Facts; Recent Trends; 4.1. Recent Trends in Reserve Accumulation in Low-Income Countries and Emerging Markets; Explaining Demand for Reserves; 4.2. Median Reserve Coverage in Low-Income Countries; 4.1. Estimating Reserve Demand in LICs

4.3. Low-Income Countries: Actual and Predicted Reserves, 2003-20084.4. Actual and Predicted Reserves to GDP, by region; 5. Optimal Precautionary Reserves; Analytical Framework; External Shocks and Crisis Events; 5.1. External Shock Episodes; Benefits of Holding Reserves; 5.1. Median Growth Rate of Absorption and Consumption; 5.2. Probability of Absorption Drops; 5.2. Marginal Effects on the Probability of a Crisis; 5.3. Fundamentals and Marginal Effects on Crisis Probability; 5.4. Absorption Loss Regression; Cost of Holding Reserves; 6. Calibrating Reserves for Country Groups

Benchmark Calibration and Sensitivity AnalysisResults across Country Groups; 6.1. Calibrated Optimal Reserves for LICs; 6.1. Sensitivity of Optimal Reserves to Country Fundamentals; 6.2. Actual versus Computed Reserves, 2008-2009; 7. Conclusion; Appendix 1: Data Sources and Definitions: Event Study Analysis; Shock Variables; Economic Variables; A1.1. List of Countries and Structural Characteristics of the Economy; Appendix 2: Robustness Analysis; A2.1. Costs of External Shocks by Variable and Type of Shock (25th percentile)

A2.2. Costs of External Shocks by Variable and Type of Shock (Whole-Sample Distribution)

Notes:

Description based upon print version of record.

Description based on publisher supplied metadata and other sources.

ISBN:

9781475531145

1475531141

9781475554526

1475554524

9781475523843

147552384X

OCLC:

862104623