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Using panel data for 15 economies from 2001-12, I identify determinants of central bank foreign exchange intervention in emerging markets (“EMs”) with flexible to moderately managed exchange rates. Similar to other studies, I find that central banks tend to “lean against the wind,” buying/selling more foreign exchange in response to greater short-run and medium-run appreciation/depreciation pressures. The panel structure provides a framework to test whether other macroeconomic variables influence the different rates of reserve accumulation between economies. In testing other variables, I find evidence of both precautionary and external competitiveness motives for reserve accumulation.

Foreign exchange administration. --- Banks and banking --- Foreign exchange --- Banks and Banking --- Foreign Exchange --- Monetary Policy --- Currency --- Banking --- Exchange rates --- Foreign exchange intervention --- International reserves --- Real effective exchange rates --- Central banks --- Foreign exchange reserves --- United States

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This paper proposes a novel theory of reserve accumulation that emphasizes the role of an independent central bank. Motivated by a positive correlation between reserve accumulation and central bank independence in Latin America, the paper develops a quantitative sovereign default model with an independent central bank that can accumulate a risk-free foreign asset. The findings show that if the central bank is more patient than the government and as patient as households are, in equilibrium, the government issues more debt than what is socially optimal, and the central bank accumulates reserves to undo government over-borrowing. A key insight is that the government can issue more debt for any level of reserves but chooses not to because doing so would increase sovereign spreads, making it more costly to borrow. Quantitatively, the analysis finds that the central bank independence channel accounts for 75 percent of the average reserve levels observed in Mexico from 1994 to 2017. Finally, the paper shows that accumulating reserves improves social welfare. Welfare gains come from reducing the costs of front-loading public spending.

Central Bank Independence --- Currencies and Exchange Rates --- Currency --- Debt Markets --- Exchange Rate Regime --- External Debt --- Finance and Financial Sector Development --- International Economics and Trade --- International Reserves --- Public Sector Development --- Reserve Accumulation --- Sovereign Debt

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This paper provides a historical perspective on the role of international reserves in low-income countries as a cushion against large external shocks over the last three decades - including the current global crisis. The results suggest that international reserves have played a role in buffering external shocks, with the resulting macroeconomic costs varying with the nature of the shock, the economy's structural characteristics, and the level of reserves.

Finance --- Business & Economics --- International Finance --- Foreign exchange reserves --- Finance, Public --- Currency reserves, Foreign --- Foreign currency reserves --- Foreign reserves (Foreign exchange reserves) --- International reserves (Foreign exchange reserves) --- Reserves, Foreign exchange --- Reserves (Accounting) --- Banks and Banking --- Exports and Imports --- Macroeconomics --- Macroeconomic Analyses of Economic Development --- Open Economy Macroeconomics --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- Monetary Policy --- Empirical Studies of Trade --- Trade: General --- Macroeconomics: Consumption --- Saving --- Wealth --- International Investment --- Long-term Capital Movements --- International economics --- Banking --- International reserves --- Terms of trade --- Imports --- Consumption --- Foreign direct investment --- Economic policy --- nternational cooperation --- Economics --- Investments, Foreign --- Nternational cooperation

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In this paper, the behavior of China’s imports during the period 1980-92 is studied. The estimation of cointegration and error correction mechanisms enables the separation of the long-run and short-run determinants of imports in China. The estimated cointegrating vector using Johansen’s cointegration approach shows that, in the long run, China’s imports are sensitive to changes in output, relative prices, and foreign exchange reserves. It also shows that the short-run output elasticity of imports is much greater than that in the long run, suggesting that import substitution may have been an important factor over the sample period. The forecasting ability of a conventional partial adjustment import function is then compared with that of the Johansen cointegration model; the Johansen model is shown to outperform the conventional one in forecasting accuracy.

Banks and Banking --- Exports and Imports --- Foreign Exchange --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Econometric and Statistical Methods: Special Topics: Other --- Empirical Studies of Trade --- Trade: General --- Monetary Policy --- International economics --- Banking --- Currency --- Foreign exchange --- Imports --- International reserves --- International trade --- Central banks --- Foreign exchange reserves --- China, People's Republic of

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Jordan has seen a large increase in its international reserve holdings in recent years. While a healthy reserve buffer is needed under a fixed exchange rate regime, determining optimal reserve levels is not straightforward. In this paper, we first use several traditional measures of reserves adequacy to compare Jordan's reserve holdings with other emerging market (EM) countries. Subsequently, we analyze Jordan's reserve holdings using a reserves-optimizing model, based on Jeanne and Ranciere (2006) (J-R), but extended to allow reserve holdings to influence the likelihood of a sudden stop. The overall analysis suggests that Jordan's reserve holdings provide sufficient support to sustain the dinar peg and to deal with the most extreme capital account disruptions.

Banks and Banking --- Exports and Imports --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- International Lending and Debt Problems --- Monetary Policy --- International economics --- Banking --- Sudden stops --- Capital inflows --- Current account deficits --- External debt --- International reserves --- Capital movements --- Balance of payments --- Debts, External --- Foreign exchange reserves --- Jordan --- Bank reserves --- Capital movements. --- Foreign exchange rates --- Foreign exchange