search query: @journal_id 24 / total: 1349
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| Author: | Jeanne, O. Ranciere, R. |
| Title: | The optimal level of international reserves for emerging market countries: a new formula and some applications |
| Journal: | Economic Journal
2011 : SEP, VOL. 121:555, p. 905-930 |
| Index terms: | emerging markets foreign exchange liabilities risk aversion capital flows opportunity costs |
| Language: | eng |
| Abstract: | We show a model of the optimal international reserves level for a small open economy seeking insurance against sudden capital flows stoppages. A formula for the optimal level of reserves is derived, proving that plausible calibrations can explain reserves of the order of magnitude noticed in many emerging market countries. The reserve buildup in the emerging market of Asia can be explained only if a large anticipated output cost of sudden stops and a high risk aversion level are assumed. |
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