NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Real Exchange Rate and International Reserves in the Era of Growing Financial and Trade Integration

Joshua Aizenman, Daniel Riera-Crichton

NBER Working Paper No. 12363
Issued in July 2006
NBER Program(s):   IFM   ITI

This paper evaluates the impact of international reserves, terms of trade shocks and capital flows on the real exchange rate (REER). We observe that international reserves cushions the impact of TOT shocks on the REER, and that this effect is important for developing but not for industrial countries. This buffer effect is especially significant for Asian countries, and for countries exporting natural resources. Financial depth reduces the buffer role of IR in developing countries. Developing countries REER seem to be more sensitive to changes in reserve assets; whereas industrial countries display a significant relationship between hot money and REER.

download in pdf format
   (357 K)

email paper

This paper is available as PDF (357 K) or via email.

This paper was revised on February 21, 2007

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12363

Published: Aizenman, Joshua and Daniel Riera-Crichton. "Real exchange rate and international reserves in the era of growing financial and trade integration." Review of Economics and Statistics 90, 4 (2008): 812-815.

Users who downloaded this paper also downloaded these:
Aizenman, Edwards, and Riera-Crichton w17692 Adjustment patterns to commodity terms of trade shocks: the role of exchange rate and international reserves policies
Obstfeld, Shambaugh, and Taylor w14217 Financial Stability, the Trilemma, and International Reserves
Aizenman w12734 International Reserves Management and the Current Account
Rodrik w11952 The Social Cost of Foreign Exchange Reserves
Chinn w11521 A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us