Indicator for monitoring the level of international reserves (RIN) for Costa Rica

Esteban Méndez-Chacón ()
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Esteban Méndez-Chacón: Department of Economic Research, Central Bank of Costa Rica

No 2302, Notas Técnicas from Banco Central de Costa Rica

Abstract: This document presents an indicator for monitoring the balance of international reserves. This indicator is based on the Assessing Reserve Adequacy (ARA) metric, a methodology proposed by the International Monetary Fund (IMF) to identify the level of adequate reserves. The indicator reflects a broad range of potential sources of external instability in the economy. In addition, according to studies carried out by the IMF, the indicator is best at predicting episodes of external crises than other alternative measures of adequate reserves. It is suggested to consider the indicator designed for economies with a floating exchange rate for its application to the case of Costa Rica, in line with the exchange regime adopted in 2015. The indicator is estimated for the country for the period 2019 to 2022, where it is concluded that the reserves were above the minimum adequate level suggested by the IMF in most quarters. Este documento presenta un indicador para el seguimiento del saldo de reservas internacionales netas (RIN). Este indicador se sustenta en una metodología planteada por el Fondo Monetario Internacional (FMI) para identificar el nivel de reservas adecuadas, la cual tiene la ventaja de que condensa varias fuentes potenciales de inestabilidad externa de la economía. Además, según los estudios realizados por el FMI, el indicador muestra un desempeño superior para predecir de forma temprana episodios de crisis externas que otras medidas alternativas de reservas adecuadas. Se sugiere que, para aplicar el indicador de seguimiento de RIN al caso de Costa Rica, se utilice la versión diseñada para economías con tipo de cambio flotante, en línea con el régimen cambiario adoptado desde el 2015. Se estima el comportamiento del indicador para el país entre el 2019 y el 2022, donde se concluye que las reservas se ubicaron en la mayoría de los trimestres por encima del nivel adecuado mínimo sugerido por el FMI.

Keywords: Foreign Reserves; External Crises; Indicators of Reserve Adequacy; Crisis externas; Reservas internacionales (search for similar items in EconPapers)
JEL-codes: F31 F32 F37 F41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2023-06
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