Research on the Demand for International Reserves: Developments in Academia, the Contribution of IMF Researchers, and Influence on IMF Surveillance (2012)
BibTeX
@MISC{Aizenman12researchon,
author = {Joshua Aizenman and Hans Genberg},
title = {Research on the Demand for International Reserves: Developments in Academia, the Contribution of IMF Researchers, and Influence on IMF Surveillance},
year = {2012}
}
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Abstract
This paper reviews the academic literature on the demand for and adequacy of international reserves and assesses the contribution of research carried out by IMF staff to this literature. It also evaluates the impact of research on analytical approaches used by Fund staff to assess member countries ’ reserve holdings in the context of IMF surveillance activities. The paper concludes that IMF economists were generally at the forefront of research during the 2000s, notably in empirical applications of theoretical models, in quantifying the effects of growing exposures to financial crises on reserve accumulation, and in developing new methodologies to infer optimal reserve levels. Research influenced the policy frameworks for assessing reserves by drawing attention to sources of vulnerability resulting from sudden stops in capital flows and from currency and duration mismatches in balance sheets in the economy. A number of explicit indicators and models that were used in reserve assessments and advice to member countries had their origin in theoretical and empirical research. Notwithstanding the success of research-based models in capturing stylized facts about the determinants of central banks ’ demand for reserves, an important lesson from empirical research has
Keyphrases
international reserve imf surveillance imf researcher member country empirical research sudden stop fund staff analytical approach research-based model optimal reserve level imf surveillance activity imf economist empirical application policy framework academic literature central bank demand duration mismatch new methodology stylized fact reserve accumulation financial crisis balance sheet important lesson reserve assessment explicit indicator theoretical model capital flow imf staff
