Monetary Policy and International Reserves in Emerging Economies: Theory and Empirics

Prakash Shrestha and Willi Semmler

Chapter 12 in Emerging Markets and Sovereign Risk, 2015, pp 213-230 from Palgrave Macmillan

Abstract: Abstract One striking feature following the Asian economic crisis of 1997 is that many emerging economies have built up a large stock of international reserves (Aizenman & Marion, 2003; Aizenman & Lee, 2007; IMF, 2010). This reflects an important fact that sound macroeconomic management with low inflation may not insulate an economy from the likely adverse impact of volatile capital flows in the current international monetary system. The international monetary system has been observing global imbalances and unpredictable, volatile cross-border capital flows (IMF, 2010). A sharp accumulation of international reserves in many emerging countries in response to this has generated widespread concern among both policy makers and academic circles (Obstfeld, Shambaugh, & Taylor, 2010; IMF, 2010; Aizenman & Lee, 2007).

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Central Bank; International Monetary Fund (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-45066-1_12

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DOI: 10.1057/9781137450661_12

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