Hoarding of International Reserves: Mrs Machlup's Wardrobe and the Joneses
Motivated by the observed international reserve hoarding behavior in the post-1997 crisis period, we explore the Mrs Machlup's Wardrobe hypothesis and the related keeping up with the Joneses argument. It is conceived that, in addition to psychological reasons, holding a relatively high level of international reserves reduces the vulnerability to speculative attacks and promotes growth. A stylized model is constructed to illustrate this type of hoarding behavior. The relevance of the keeping up with the Joneses effect is examined using a few plausible empirical specifications and data from 10 East Asian economies. Panel-based regression results are suggestive of the presence of the Joneses effect, especially in the post-1997 crisis period. Copyright © 2009 Blackwell Publishing Ltd.
Year of publication: |
2009
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Authors: | Cheung, Yin-Wong ; Qian, Xingwang |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 17.2009, 4, p. 824-843
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Publisher: |
Wiley Blackwell |
Saved in:
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