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International Reserves :, Precautionary vs. Mercantilist Views, Theory and Evidence, Joshua Aizenman, Jaewoo Lee

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Abstract
This paper compares the importance of precautionary and mercantilist motives in the hoarding of international reserves by developing countries. Overall, empirical results support precautionary motives; in particular, a more liberal capital account regime increases international reserves. Theoretically, large precautionary demand for international reserves arises as a self-insurance to avoid costly liquidation of long-term projects when the economy is susceptible to sudden stops. The welfare gain from the optimal management of international reserves is of a first-order magnitude, reducing the welfare cost of liquidity shocks from a first-order to a second-order magnitude
Table Of Contents
""Contents""; ""I. INTRODUCTION AND SUMMARY""; ""II. INTERNATIONAL RESERVES: EVIDENCE""; ""III. THE MODEL""; ""IV. CONCLUDING REMARKS""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (32 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781452757223

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