A Fiscal Price Tag for International Reserves

David Hauner

No 2005/081, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the (quasi-)fiscal impact of the (opportunity) cost of international reserves. It proposes a conceptual framework, with particular emphasis on two hitherto somewhat neglected aspects: a more appropriate measure of gross opportunity cost, and potential savings from lower external debt spreads that countries "buy" by holding reserves. The framework is then applied to 100 countries over 1990-2004. The results suggest that a turning point has been reached in recent years: while most countries made money on their reserves during 1990-2001, most have been losing money during 2002-04.

Keywords: WP; return; GDP ratio; central bank; rate of return; reserves coefficient (search for similar items in EconPapers)
Pages: 29
Date: 2005-04-01
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Citations: View citations in EconPapers (23)

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