International Reserve Adequacy in Central America

Kristin Magnusson Bernard

No 2011/144, IMF Working Papers from International Monetary Fund

Abstract: Countries’ absolute and relative international reserves adequacy has recently attracted considerable attention. The analysis has however concentrated on the largest and most advanced economies. We apply various methodologies for assessing reserve adequacy in Central America, taking into account the region’s high degree of deposit dollarization. We find that reserve cover is low both in an absolute and relative sense, suggesting further reserve accumulation is an important policy option for reducing vulnerabilities.

Keywords: WP; reserve; debt; GDP ratio; Foreign reserves; balance of payments crises; financial dollarization; reserve demand; Central American economy; demand regression; precautionary reserve; Central America's reserve cover; GDP volatility; International reserves; Reserve positions; Emerging and frontier financial markets; Reserves accumulation; Central America (search for similar items in EconPapers)
Pages: 27
Date: 2011-06-01
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Citations: View citations in EconPapers (3)

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