Reserve accumulation, growth and financial crises

Mostra el registre complet Registre parcial de l'ítem

• dc.contributor.author Benigno, Gianluca
• dc.contributor.author Fornaro, Luca
• dc.contributor.author Wolf, Martin
• dc.date.accessioned 2022-10-19T10:12:07Z
• dc.date.embargoEnd info:eu-repo/date/embargoEnd/2024-08-02
• dc.date.issued 2022
• dc.description.abstract We present a model that reproduces two salient facts characterizing the international monetary system: Fast growing emerging countries i) run current account surpluses, ii) accumulate international reserves and receive net private inflows. We study a two-sector, tradable and non-tradable, small open economy. There is a growth externality in the tradable sector and agents have imperfect access to international financial markets. By accumulating foreign reserves, the government induces a real exchange rate depreciation and a reallocation of production towards the tradable sector that boosts growth. Financial frictions generate imperfect substitutability between private and public debt flows so that private agents do not perfectly offset the government policy. The possibility of using reserves to provide liquidity during crises amplifies the positive impact of reserve accumulation on growth. The optimal reserve management entails a fast rate of reserve accumulation, as well as higher growth and larger current account surpluses compared to the economy with no policy intervention.
• dc.description.sponsorship Financial support from the ESRC Grant on the Macroeconomics of Capital Account Liberalization is acknowledged. Luca Fornaro acknowledges financial support from the European Research Council under the European Union's Horizon 2020 research and innovation program, Starting Grant (851896-KEYNESGROWTH) and the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (SEV2015-0563 and CEX2019-000915-S), and from the Generalitat de Catalunya, through CERCA and SGR Programme (2017-SGR-1393).
• dc.embargo.liftdate 2024-08-02
• dc.format.mimetype application/pdf
• dc.identifier.citation Benigno G, Fornaro L, Wolf M. Reserve accumulation, growth and financial crises. Journal of International Economics. 2022 Nov;139:103660. DOI: 10.1016/j.jinteco.2022.103660
• dc.identifier.doi http://dx.doi.org/10.1016/j.jinteco.2022.103660
• dc.identifier.issn 0022-1996
• dc.identifier.uri http://hdl.handle.net/10230/54485
• dc.language.iso eng
• dc.publisher Elsevier
• dc.relation.ispartof Journal of International Economics. 2022 Nov;139:103660
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/851896
• dc.relation.projectID info:eu-repo/GrantAgreement/ES/1PE/SEV2015-0563
• dc.relation.projectID info:eu-repo/GrantAgreement/ES/2PE/CEX2019-000915-S
• dc.rights © Elsevier http://dx.doi.org/10.1016/j.jinteco.2022.103660
• dc.rights.accessRights info:eu-repo/semantics/embargoedAccess
• dc.subject.keyword Foreign reserve accumulation
• dc.subject.keyword Gross capital flows
• dc.subject.keyword Financial crises
• dc.subject.keyword Allocation puzzle
• dc.subject.keyword Exchange rate undervaluation
• dc.subject.keyword Growth
• dc.title Reserve accumulation, growth and financial crises
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/acceptedVersion