A macroprudential theory of foreign reserve accumulation / by Fernando Arce, Julien Bengui and Javier Bianchi.: FB3-5/2019-43E-PDF
"This paper proposes a theory of foreign reserves as macroprudential policy. We study an open-economy model of financial crises in which pecuniary externalities lead to overborrowing, and show that by accumulating international reserves, the government can achieve the constrained-efficient allocation. The optimal reserve accumulation policy leans against the wind and significantly reduces the exposure to financial crises. The theory is consistent with the joint dynamics of private and official capital flows, both over time and in the cross-section, and can quantitatively account for the recent upward trend in international reserves"--Abstract, page ii.
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| Department/Agency | Bank of Canada. |
|---|---|
| Title | A macroprudential theory of foreign reserve accumulation / by Fernando Arce, Julien Bengui and Javier Bianchi. |
| Series title | Bank of Canada staff working paper, 1701-9397 ; 2019-43 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "October 2019." Includes bibliographical references (pages 25-27). Includes abstracts in English and French. |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2019. ©2019 |
| Author / Contributor | Arce, Fernando, author. Bengui, Julien, author. Bianchi, Javier, author. |
| Description | 1 online resource (ii, 29 pages) : colour illustrations. |
| Catalogue number |
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| Subject terms | Public finance Financial services Risk management Models |