The Optimal Level of International Reserves For Emerging Market Countries: A New Formula and Some Applications

Olivier Jeanne and Rancière, Romain
Authors registered in the RePEc Author Service: Romain Rancière

No 6723, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We present a model of the optimal level of international reserves for a small open economy seeking insurance against sudden stops in capital flows. We derive a formula for the optimal level of reserves, and show that plausible calibrations can explain reserves of the order of magnitude observed in many emerging market countries. However, the recent build-up of reserves in emerging market Asia seems in excess of what would be implied by an insurance motive against sudden stops.

Keywords: Balance-of-payments crises; International reserves; Sudden stops (search for similar items in EconPapers)
JEL-codes: F32 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://cepr.org/publications/DP6723 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: The Optimal Level of International Reserves For Emerging Market Countries: A New Formula and Some Applications (2011)
Working Paper: The Optimal Level of International Reserves For Emerging Market Countries: A New Formula and Some Applications (2011)
Working Paper: The Optimal Level of International Reserves For Emerging Market Countries: A New Formula and Some Applications (2011)
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:cpr:ceprdp:6723

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP6723

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().