Foreign exchange reserves in a credit constrained economy

We discuss the role of foreign exchange reserves as precautionary savings under an imperfect market framework due to the presence of endogenously determined borrowing constraints. We show that cost of holding reserves is higher in borrowin constrained economies than unconstrained ones as a result of the leverage effect of the debt.

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Year of publication:	2012
Authors:	Kurma? Akdogan
Published in:	Economie Internationale. - Centre d'études prospectives et d'informations internationales (CEPII). - 2012, 130, p. 59-79
Publisher:	Centre d'études prospectives et d'informations internationales (CEPII)
Subject:	Foreign Exchange Reserves \| Credit Constraints

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Extent:	text/html
Type of publication:	Article
Classification:	F32 - Current Account Adjustment; Short-Term Capital Movements ; F34 - International Lending and Debt Problems
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010827703