The Macroprudential Role of International Reserves
American Economic Review · 2016 · Volume 106 · Issue 5
Abstract
There has been a lot of interest since the global financial crisis in policies allowing emerging market economies to smooth the effects of the global financial cycle. Although the literature has focused mostly on capital controls emerging market governments have relied mostly on international reserves management. This paper discusses the role of reserves in capital flow management based on a simple welfare-based model of capital flows with international banking frictions.
Keywords
Business Fluctuations, Cycles, Financial Markets and the Macroeconomy, Monetary Policy, Current Account Adjustment, Short-Term Capital Movements, International Business Cycles, International Linkages to Development, Role of International Organizations, Development Planning and Policy: Trade Policy, Factor Movement, Foreign Exchange Policy
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