Working Papers in full text
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
All
Other research-related activities and publications of the IMF can be found at IMF Research
|
Free Email Notification
Receive emails when we post new
items of interest to you.
Subscribe or
Modify your profile
|
|
|
|
The Optimal Level of International Reserves for Emerging Market Countries: Formulas and Applications
|
Author/Editor: |
Jeanne, Olivier | Ranciere, Romain |
| Authorized for Distribution: |
October 1, 2006 |
|
Electronic Access: |
Free Full Text (PDF file size is 308KB)
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: 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.
|
|
|
|
Order a print copy
|
|
Series: |
Working Paper No. 06/229 |
|
Subject(s): |
Foreign exchange reserves | Emerging markets | Balance of payments | Financial crisis | Capital flows | Economic models |
|
Author's keyword(s): |
Foreign exchange reserves | balance of payments crises | sudden stops | capital flows |
|
|
|
|
| |
Published: |
|
October 1, 2006 |
|
|
|
|
| |
ISBN/ISSN: |
|
1934-7073 |
|
Format: |
|
Paper |
| |
Stock No: |
|
WPIEA2006229 |
|
Pages: |
|
33 |
| |
Price: |
|
US$18.00 (Academic Rate: US$18.00 )
|
|
|
|
|
|
|
