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Author/Editor:
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Tereanu, Eugen
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Publication Date:
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September 01, 2010
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Electronic Access:
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Free Full text
(PDF file size is 1,147KB).
Use the free
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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
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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.
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Order a print copy
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Series:
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Working Paper No. 10/215
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Subject(s):
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Balance of payments | Economic models | Fiscal risk | Foreign exchange reserves | Gambia, The | Reserves | Reserves adequacy | Risk management | Savings
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Author's Keyword(s):
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Precautionary savings | Reserve adequacy | Optimal reserves | Balance of payments |
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English
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Publication Date:
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September 01, 2010
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Format:
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Paper
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Stock No:
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WPIEA2010215
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Pages:
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16
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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