The Optimal Level of International Reserves for Emerging Market Countries: Formulas and Applications
We present a model of the optimal level of international reserves for a small open economy that is vulnerable to sudden stops in capital flows. Reserves allow the country to smooth domestic absorption in response to sudden stops, but yield a lower return than the interest rate on the country'...
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Format: | Elektronisch E-Book |
Sprache: | English |
Veröffentlicht: |
Washington, D.C
International Monetary Fund
2006
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Schriftenreihe: | IMF Working Papers
Working Paper No. 06/229 |
Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
Zusammenfassung: | We present a model of the optimal level of international reserves for a small open economy that is vulnerable to sudden stops in capital flows. Reserves allow the country to smooth domestic absorption in response to sudden stops, but yield a lower return than the interest rate on the country''s long-term debt. We derive a formula for the optimal level of reserves, and show that plausible calibrations can explain reserves of the order of magnitude observed in many emerging market countries. However, the recent buildup of reserves in Asia seems in excess of what would be implied by an insurance motive against sudden stops |
Beschreibung: | 1 Online-Ressource (33 p) |
ISBN: | 1451864892 9781451864892 |
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spelling | Ranciere, Romain Verfasser aut The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications Ranciere, Romain Washington, D.C International Monetary Fund 2006 1 Online-Ressource (33 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 06/229 We present a model of the optimal level of international reserves for a small open economy that is vulnerable to sudden stops in capital flows. Reserves allow the country to smooth domestic absorption in response to sudden stops, but yield a lower return than the interest rate on the country''s long-term debt. We derive a formula for the optimal level of reserves, and show that plausible calibrations can explain reserves of the order of magnitude observed in many emerging market countries. However, the recent buildup of reserves in Asia seems in excess of what would be implied by an insurance motive against sudden stops Online-Ausg Jeanne, Olivier Sonstige oth http://elibrary.imf.org/view/IMF001/07199-9781451864892/07199-9781451864892/07199-9781451864892.xml Verlag URL des Erstveröffentlichers Volltext |
spellingShingle | Ranciere, Romain The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications |
title | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications |
title_auth | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications |
title_exact_search | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications |
title_exact_search_txtP | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications |
title_full | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications Ranciere, Romain |
title_fullStr | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications Ranciere, Romain |
title_full_unstemmed | The Optimal Level of International Reserves for Emerging Market Countries Formulas and Applications Ranciere, Romain |
title_short | The Optimal Level of International Reserves for Emerging Market Countries |
title_sort | the optimal level of international reserves for emerging market countries formulas and applications |
title_sub | Formulas and Applications |
url | http://elibrary.imf.org/view/IMF001/07199-9781451864892/07199-9781451864892/07199-9781451864892.xml |
work_keys_str_mv | AT ranciereromain theoptimallevelofinternationalreservesforemergingmarketcountriesformulasandapplications AT jeanneolivier theoptimallevelofinternationalreservesforemergingmarketcountriesformulasandapplications |