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This paper investigates the drivers of reserves in emerging markets (EMs) and small island (SIs) and develops an operational metric for estimating reserves in SIs taking into account their unique characteristics. It uses quantile regression techniques to allow the estimated factors driving reserves holdings to vary along the reserves’ holding distribution and tests for equality among the slope coefficients of the various quantile regressions and the overall models. F-tests comparing the inter-quantile differences could not reject the that the models for the different quantiles of SIs reserve distribution were similar but this was rejected for EMs distribution suggesting that models explaining drivers of reserve holdings should take into account the country’s reserve holdings. Empirical analysis suggests that the metric performs better than existing metrics in reducing crisis probabilities in SIs.

Commerce --- Business & Economics --- Accounting --- Reserves (Accounting) --- Investments --- Amortization --- Sinking-funds --- Foreign exchange reserves --- E-books --- Currency reserves, Foreign --- Foreign currency reserves --- Foreign reserves (Foreign exchange reserves) --- International reserves (Foreign exchange reserves) --- Reserves, Foreign exchange --- Finance, Public --- Exports and Imports --- Financial Risk Management --- Foreign Exchange --- Money and Monetary Policy --- Current Account Adjustment --- Short-term Capital Movements --- International Finance Forecasting and Simulation --- Open Economy Macroeconomics --- Financial Crises --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Trade: General --- Economic & financial crises & disasters --- Monetary economics --- International economics --- Currency --- Foreign exchange --- Financial crises --- Monetary base --- Exchange rate arrangements --- Exports --- Current account --- Money --- International trade --- Exchange rate flexibility --- Money supply --- Balance of payments --- Dominican Republic

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BRICs development financing flows have increased significantly and are expected to become more prominent in the post-crisis era. We investigate the potential implications on the country-allocation of loan commitments and the degree of concessionality using a panel vector autoregression model and single equation dynamic panel estimation.We find that BRICs lend more to LICs with weaker institutions. Land-locked, resource-scarce LICs receive significantly less financing than other resource-rich LICs. The degree of concessionality is negatively correlated with the amount of loans and positively correlated with better institutional indicators suggesting that the higher the risks, the higher the required returns that BRICs expect.

Loans, Foreign --- Foreign loans --- International loans --- Loans, International --- Loans --- Conditionality (International relations) --- Foreign loan insurance --- Econometric models. --- Brazil --- Russia --- Russie --- Rossīi︠a︡ --- Rossīĭskai︠a︡ Imperīi︠a︡ --- Russia (Provisional government, 1917) --- Russia (Vremennoe pravitelʹstvo, 1917) --- Russland --- Ṛusastan --- Russia (Tymchasovyĭ uri︠a︡d, 1917) --- Russian Empire --- Rosja --- Russian S.F.S.R. --- Russia (Territory under White armies, 1918-1920) --- Economic policy. --- Exports and Imports --- Macroeconomics --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Foreign Aid --- International Lending and Debt Problems --- Personal Income, Wealth, and Their Distributions --- Trade: General --- International economics --- Finance --- Development assistance --- Concessional external borrowing --- Personal income --- Exports --- Financial institutions --- Foreign aid --- External debt --- National accounts --- International trade --- International relief --- Debts, External --- Income --- China, People's Republic of

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The economic literature has examined deposit dollarization in nominal terms, typically focusing on the ratio of foreign currency deposits to broad money. However, while private agent demand for foreign currency may remain unchanged in foreign currency terms, there could be large fluctuations in the dollarization ratio simply due to exchange rate movements. This paper proposes a new approach to measuring dollarization that removes these exchange rate effects, and demonstrates that beyond the variance of inflation and depreciation, the level of inflation and size of depreciation also matter for dollarization. While dollarization in nominal terms surged during the recent global financial crisis, there was a downward trend in real terms. Employing a set of econometric estimators, this paper investigates whether “real” dollarization during 2006–09 was associated with the crisis, and the role of initial macroeconomic conditions, quality of institutions, risk aversion, and prudential measures. We find that exchange rate appreciation and reductions in sovereign risk do moderate dollarization; but the results for global volatility have low statistical significance, perhaps because global shocks tend to preserve, to a large extent, relative attractiveness of foreign assets. Nonetheless, estimated impulse-response functions point to a large but short-lived positive impact of global volatility on dollarization, which could reflect economic agents heightened concerns about spillover effects of global uncertainty on the domestic economy.

Dollarization --- Global Financial Crisis, 2008-2009 --- Foreign exchange rates --- Financial risk --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Global Economic Crisis, 2008-2009 --- Subprime Mortgage Crisis, 2008-2009 --- Financial crises --- Monetary policy --- Business risk (Finance) --- Money risk (Finance) --- Risk --- Econometric models. --- Rates --- Foreign Exchange --- Investments: General --- Money and Monetary Policy --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financial Crises --- Portfolio Choice --- Investment Decisions --- Financial Institutions and Services: General --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Investment --- Capital --- Intangible Capital --- Capacity --- Monetary economics --- Currency --- Macroeconomics --- Currencies --- Depreciation --- Exchange rate arrangements --- Money --- National accounts --- Saving and investment --- Zambia

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The Caribbean share of the global tourism market has been declining. This study examines what is driving tourism flows. It estimates the determinants of tourism and explores variations based on sample differences, and also constructs a static nominal price comparison index. The paper finds that: (i) tourism arrivals and expenditure are sensitive to both price and income factors in source markets; (ii) price and income elasticities of tourism have declined since 2008; (iii) price elasticity is statistically insignificant for “high-end” destinations; and (iv) the nominal cost of an average one week beach holiday in the Caribbean is higher than in other beach destinations around the world. These results point to the need for structural reforms to raise product quality, cost reduction or containment in “low-end” destinations, including possibly via exchange rates, and an adjustment in aggregate consumption to adapt to the implications of a lower contribution to GDP from tourism.

Tourism --- Structural adjustment (Economic policy) --- Economic policy --- Caribbean Area --- Economic policy. --- Foreign Exchange --- Macroeconomics --- Public Finance --- Industries: Hospital,Travel and Tourism --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Sports --- Gambling --- Restaurants --- Recreation --- Economic History: Macroeconomics --- Growth and Fluctuations: Latin America --- Caribbean --- Economywide Country Studies: Latin America --- Financial Crises --- National Government Expenditures and Related Policies: General --- Personal Income, Wealth, and Their Distributions --- Hospitality, leisure & tourism industries --- Currency --- Foreign exchange --- Economic & financial crises & disasters --- Public finance & taxation --- Real exchange rates --- Global financial crisis of 2008-2009 --- Expenditure --- Personal income --- Economic sectors --- Financial crises --- National accounts --- Global Financial Crisis, 2008-2009 --- Expenditures, Public --- Income --- United States

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Although China’s much-needed transition to a new growth path is proceeding broadly as expected, the transition is still fraught with uncertainty, including regarding the Chinese authorities’ ability to achieve a smooth rebalancing of growth and the extent of the attendant slowdown in activity. Thus, in the short run, the transition process is likely to entail significant spillovers through trade and commodities, and possibly financial channels. This note sheds some light on the size and nature of financial spillovers from China by looking at the impact of developments in China on global financial markets, with a particular emphasis on differentiation across asset classes and markets. The note shows that economic and financial developments in China have a significant impact on global financial markets, but these effects reflect primarily the central role the country plays in goods trade and commodity markets, rather than China’s financial integration in global markets and the direct financial linkages it has with other countries.

Balance of payments --- Bond yields --- Bonds --- Exports and Imports --- Finance --- Finance: General --- Financial institutions --- Financial Instruments --- Financial Markets and the Macroeconomy --- Financial markets --- Financial sector development --- Financial services industry --- Foreign direct investment --- General Financial Markets: General (includes Measurement and Data) --- Institutional Investors --- International Investment --- Investment & securities --- Investments, Foreign --- Investments: Bonds --- Investments: Stocks --- Long-term Capital Movements --- Non-bank Financial Institutions --- Pension Funds --- Stock exchanges --- Stock markets --- Stocks --- China, People's Republic of