OPTIMAL INTERNATIONAL RESERVES HOLDINGS IN EMERGING MARKETS ECONOMIES: THE BRAZILIAN CASE

Antonio Francisco Silva and Érica Domingos da Silva

Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: This paper discusses the optimal international reserves holding for Brazilian economy. The optimal is determined with the buffer stock (inventory) model, using a time series approach. This paper differs from traditional approaches that run cross-section analysis. We evaluate Brazilian's reserves holdings with the model and discuss the role of IMF accord in the reserves holdings. The paper also presents evidence to support the idea of fewer needs to hold international reserves in a floating foreign exchange rate regime than in a fixed one. Conclusions highlight that Brazilians' foreign reserves are slightly above the optimal level and the model may allow the country to evaluate the needs of IMF accord renew.

JEL-codes: F32 F34 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (4)

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