Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia
Pierre L. Siklos Andrew J. Filardo ()
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Pierre L. Siklos Andrew J. Filardo: Wilfrid Laurier University, http://viessmanncentre.ca/pierre-siklos/
Authors registered in the RePEc Author Service: Andrew Filardo and
Pierre Siklos ()
LCERPA Working Papers from Laurier Centre for Economic Research and Policy Analysis
This paper 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.
Keywords: foreign exchange reserves accumulation; monetary and financial stability (search for similar items in EconPapers)
JEL-codes: F41 F32 E44 D52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon, nep-opm and nep-sea
Date: 2015-02-01, Revised 2015-02-01
Note: LCERPA Working Paper No. 2015-4
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Journal Article: Prolonged Reserves Accumulation, Credit Booms, Asset Prices and Monetary Policy in Asia (2016)
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)
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Persistent link: https://EconPapers.repec.org/RePEc:wlu:lcerpa:0086
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