TY  - JOUR
AU  - Aizenman,Joshua
AU  - Lee,Jaewoo
TI  - Financial Versus Monetary Mercantilism-Long-run View of Large International Reserves Hoarding
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12718
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12718
L1  - http://www.nber.org/papers/w12718.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

Jaewoo Lee
Research Department
International Monetary Fund
Washington DC, 20431
E-Mail: jlee3@imf.org
AB  - The sizable hoarding of international reserves by several East Asian countries has been frequently attributed to a modern version of monetary mercantilism -- hoarding international reserves in order to improve competitiveness. From a long-run perspective, manufacturing exporters in East Asia adopted financial mercantilism -- subsidizing the cost of capital -- during decades of high growth. They switched to hoarding large international reserves when growth faltered, making it harder to disentangle the monetary mercantilism from precautionary response to the heritage of past financial mercantilism. Monetary mercantilism also lowers the cost of hoarding, but may be associated with negative externalities leading to competitive hoarding.
ER  -