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Hoarding for Stormy Days - Test of International Reserves Providing Financial Buffer Services / Joshua Aizenman, Yothin Jinjarak.
- Format:
- Book
- Author/Creator:
- Aizenman, Joshua.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25909.
- NBER working paper series no. w25909
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- This paper outlines a tractable cost-benefit analysis of the buffer stock financial services provided by international reserves and applies it to 8 of the largest Emerging Markets (BRICS, Indonesia, Mexico, Turkey) during 2000-2019. The efficient management of international reserves generates sizable benefits for countries characterized by hard-currency external debt. These benefits increase with the volatility of the real exchange rates and sovereign spreads. While the first-best policy calls for prudential regulations, counter-cyclical management of hoarding reserves in good times and selling them in bad times provides buffers stock financial services adding up to about 3% of GDP during our sample period.
- Notes:
- Print version record
- May 2019.
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