International Reserve Adequacy in The Gambia

 
Author/Editor: Tereanu, Eugen
 
Publication Date: September 01, 2010
 
Electronic Access: Free Full text (PDF file size is 1,147KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper applies intertemporal models of precautionary saving to compute an optimal level of international reserves for The Gambia. The analysis focuses on current account shocks specific to a low-income economy with a significant import component and complements a more standard, rule-of-thumb reserve adequacy assessment. The results suggest a central range from 4.5 months to 7 months of imports, which is broadly aligned with the recent actual coverage. Notwithstanding parameter sensitivity, the simulations allow for more informed policy decisions that balance flexibility with a prudent approach to reserve use.
 
Series: Working Paper No. 10/215
Subject(s): Balance of payments | Economic models | Fiscal risk | Foreign exchange reserves | Gambia, The | Reserves | Reserves adequacy | Risk management | Savings

Author's Keyword(s): Precautionary savings | Reserve adequacy | Optimal reserves | Balance of payments
 
English
Publication Date: September 01, 2010
Format: Paper
Stock No: WPIEA2010215 Pages: 16
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org