Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia

Andrew Filardo () and Pierre Siklos

Emerging Markets Finance and Trade, 2016, vol. 52, issue 2, 364-381

Abstract: This article examines past evidence of prolonged periods of foreign exchange reserves accumulation in the Asia-Pacific region. Several proxies for this unobserved variable are considered, including a newly proposed one based on a factor model. We focus on identifying periods of prolonged interventions and identify its key macro-financial determinants. Two broad conclusions emerge from the stylized facts and the econometric evidence. First, the best protection against costly reserves accumulation is a more flexible exchange rate. Second, the necessity to accumulate reserves as a bulwark against goods price inflation is misplaced. Instead, there is a strong link between asset price movements and the likelihood of accumulating foreign exchange reserves that are costly. Policy implications are also drawn.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2014.998562 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Prolonged reserves accumulation, credit booms, asset prices and monetary policy in Asia (2015)
Working Paper: Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia (2015)
Working Paper: Prolonged reserves accumulation, credit booms, asset prices and monetary policy in Asia (2013)
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:mes:emfitr:v:52:y:2016:i:2:p:364-381

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2014.998562

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().