TY  - JOUR
AU  - Aizenman,Joshua
AU  - Riera-Crichton,Daniel
TI  - Real Exchange Rate and International Reserves in the Era of Growing Financial and Trade Integration
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12363
PY  - 2006
Y2  - July 2006
UR  - http://www.nber.org/papers/w12363
L1  - http://www.nber.org/papers/w12363.pdf
N1  - Author contact info:
Joshua Aizenman
Department of Economics;  E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA  95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu

Daniel Riera-Crichton
Department of Economics, Bates College
Andrews Road 2
Office 237 Pettingill Hall
Lewiston, ME 04240
E-Mail: drieracr@bates.edu
M2  - featured in NBER digest on 2006-07-17
AB  - 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.
ER  -