Format:
Online-Ressource (40 p)
Edition:
Online-Ausg.
ISBN:
1475571291
,
9781475571295
Series Statement:
IMF Working Papers Working Paper No. 13/33
Content:
Two striking facts about international capital flows in emerging economies motivate this paper: (1) Governments hold large amounts of international reserves, for which they obtain a return lower than their borrowing cost. (2) Purchases of domestic assets by nonresidents and purchases of foreign assets by residents are both procyclical and collapse during crises. We propose a dynamic model of endogenous default that can account for these facts. The government faces a trade-off between the benefits of keeping reserves as a buffer against rollover risk and the cost of having larger gross debt positions. Long-duration bonds, the countercyclical default premium, and sudden stops are important for the quantitative success of the model
Additional Edition:
Erscheint auch als Druck-Ausgabe Bianchi, Javier International Reserves and Rollover Risk Washington, D.C. : International Monetary Fund, 2013 ISBN 9781475571295
Language:
English
DOI:
10.5089/9781475571295.001
