Reserve accumulation, growth and financial crises

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• dc.contributor.author Benigno, Gianluca
• dc.contributor.author Fornaro, Luca
• dc.contributor.author Wolf, Martin
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2024-11-14T10:09:55Z
• dc.date.available 2024-11-14T10:09:55Z
• dc.date.issued 2012-04-01
• dc.date.modified 2024-11-14T10:08:13Z
• 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.format.mimetype application/pdf*
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1795
• dc.identifier.citation Journal of International Economics, 139, article 103660, 2022
• dc.identifier.uri http://hdl.handle.net/10230/68642
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 1795
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword foreign reserve accumulation
• dc.subject.keyword gross capital flows
• dc.subject.keyword growth
• dc.subject.keyword financial crises
• dc.subject.keyword allocation puzzle
• dc.subject.keyword exchange rate undervaluation
• dc.subject.keyword Macroeconomics and International Economics
• dc.title Reserve accumulation, growth and financial crises
• dc.title.alternative
• dc.type info:eu-repo/semantics/workingPaper