NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

International Reserves and the Global Financial Crisis

Kathryn M.E. Dominguez, Yuko Hashimoto, Takatoshi Ito

NBER Working Paper No. 17362
Issued in August 2011
NBER Program(s):   IFM

This study examines whether pre-crisis international reserve accumulations, as well as exchange rate and reserve policy decisions made during the global financial crisis, can help to explain cross-country differences in post-crisis economic performance. Our approach focuses not only on the total stock of official reserves held by countries, but also on the decisions by governments to purchase or sell reserve assets during the crisis period. We introduce new data made available through the IMF Special Data Dissemination Standard (SDDS) Reserve Template, which allow us to distinguish interest income and valuation changes in the stock of official reserves from the actively managed component of reserves. We use this novel data to gauge how (and whether) reserve accumulation policies influenced the economic and financial performance of countries during and after the global crisis. Our findings support the view that higher reserve accumulations prior to the crisis are associated with higher post-crisis GDP growth.

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An data appendix is available at http://www.nber.org/data-appendix/w17362

This paper was revised on July 11, 2012

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Document Object Identifier (DOI): 10.3386/w17362

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