2012
DOI: 10.2139/ssrn.1997720
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International Reserves in Low Income Countries: Have They Served as Buffers?

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Cited by 4 publications
(3 citation statements)
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“…National savings are associated with resilience because, if an economy suffers from chronic savings shortages, it will not have room for manoeuvre in the face of adverse shocks. For a discussion of external reserves in terms of coverage of monthly imports and resilience, see Crispolti and Tsibouris (2011).…”
Section: Discussionmentioning
confidence: 99%
“…National savings are associated with resilience because, if an economy suffers from chronic savings shortages, it will not have room for manoeuvre in the face of adverse shocks. For a discussion of external reserves in terms of coverage of monthly imports and resilience, see Crispolti and Tsibouris (2011).…”
Section: Discussionmentioning
confidence: 99%
“…From an insurance perspective, reserves can help reduce the likelihood and magnitude of abrupt drops in consumption and absorption, and consequently a loss in welfare, arising from large fluctuations in imports in the face of large external shocks. As documented by Crispolti and Tsibouris (2011), reserves appear to have cushioned countries against sharp drops in consumption and absorption for a wide range of shocks considered, including during the recent financial crisis. For instance, they find that cumulative consumption losses over a fiveyear period-measured as yearly loss relative to the pre-shock three-year trend growthwere quite substantial for past external demand and terms-of-trade shocks, at about 6-17 percentage points for countries with reserve coverage of less than three months of imports, whereas the impact was limited among those with higher coverage.…”
Section: Analytical Frameworkmentioning
confidence: 99%
“…It is well documented that weakly diversified economic structures and reliance on international trade to import large quantities of essential goods render low-income countries vulnerable to significant fluctuations in consumption in the event of external shocks. 2 An event study analysis by Crispolti and Tsibouris (2011) finds that low-income countries with reserve cover more than three months of imports were better able to smooth consumption and absorption in the face of external shocks relative to those with lower coverage. Their analysis also points to the importance of country characteristics and vulnerabilities in assessing reserve adequacy: the shock-mitigation effect of reserves was found to be particularly pronounced, for instance, in highly indebted economies, small islands, commodity exporters, and countries with fixed exchange rate regimes This paper presents a simple cost-benefit framework of precautionary reserve holdings warranted by country characteristics and fundamentals.…”
mentioning
confidence: 99%