International Reserve Management under Rollover Crises

Mauricio Barbosa-Alves, Javier Bianchi and Cesar Sosa-Padilla

No 32393, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates how a government should manage international reserves when it faces the risk of a rollover crisis. We ask, should the government accumulate reserves or reduce debt to make itself less vulnerable? We show that the optimal policy entails initially reducing debt, followed by a subsequent increase in both debt and reserves as the government approaches a safe zone. Furthermore, we find that issuing additional debt to accumulate reserves can lead to a reduction in sovereign spreads. Evidence from a panel of emerging economies is consistent with these predictions: increases in reserves financed by public external borrowing are associated with lower spreads, and reserve holdings are not systematically drawn down during crisis episodes.

JEL-codes: E4 E5 F32 F34 F41 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-cba, nep-mon and nep-opm
Note: IFM
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w32393.pdf (application/pdf)

Related works:
Working Paper: International Reserve Management under Rollover Crises (2024)
Working Paper: International Reserve Management under Rollover Crises (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:32393

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32393

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().