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Examining the case for Reserve Pooling in East Asia: Empirical Analysis

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Author Info

  • Ramkishen Rajan

    () (School of Economics, University of Adelaide, Australia)

  • Reza Siregar

    () (School of Economics, University of Adelaide, Australia)

  • Graham Bird

    () (University of Surrey, Guildford, UK)

Abstract

Two features of East Asia?s recovery from the financial turmoil of 1997-98 appear to be rather paradoxical. First, the regional economies (except Hong Kong, China and Malaysia) have allowed a relatively greater albeit modest degree of variability of their currencies according to market conditions. Second, the regional monetary authorities have simultaneously appeared keen on bolstering reserves to historically high levels. This paper examines the subject of reserve management in the broader context of monetary cooperation in East Asia. The paper briefly reviews the factors that go into the determination of ?optimal reserves? in general, and specifically in the case of East Asia. It then goes on to investigate the gains, if any, to be reaped if the East Asian economies were to pool their reserves.

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Bibliographic Info

Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2003-23.

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Length: 35 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:adl:cieswp:2003-23

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Keywords: Coverage Index; East Asia; Fiscal Costs; Foreign Exchange Reserves; Reserve Pooling; Reserve to Imports Ratio.;

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References

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  1. Kawai, Masahiro & Takagi, Shinji, 2000. "Proposed strategy for a regional exchange rate arrangement in post-crisis East Asia," Policy Research Working Paper Series 2503, The World Bank.
  2. Ramkishen Rajan, 2002. "Safeguarding against Capital Account Crises: Unilateral, Regional and Multilateral Options for East Asia," Centre for International Economic Studies Working Papers 2002-01, University of Adelaide, Centre for International Economic Studies.
  3. Ramikishen Rajan, 2002. "Exchange Rate Policy Options for Post-crisis Southeast Asia: Is There a Case for Currency Baskets?," The World Economy, Wiley Blackwell, vol. 25(1), pages 137-163, 01.
  4. Graham Bird & Ramkishen Rajan, 2002. "The Evolving Asian Financial Architecture," Centre for International Economic Studies Working Papers 2002-03, University of Adelaide, Centre for International Economic Studies.
  5. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May.
  6. Peter B. Clark, 1970. "Demand for International Reserves: A Cross-Country Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 3(4), pages 577-94, November.
  7. Ramkishen Rajan & Reza Siregar & Graham Bird, 2002. "Capital Flows and Regional Financial Interdependencies in the Context of Crises: Evidence From East Asia," Centre for International Economic Studies Working Papers 2002-19, University of Adelaide, Centre for International Economic Studies.
  8. Barry J. Eichengreen & Donald J. Mathieson, 2000. "The Currency Composition of Foreign Exchange Reserves - Retrospect and Prospect," IMF Working Papers 00/131, International Monetary Fund.
  9. Frenkel, Jacob A & Jovanovic, Boyan, 1981. "Optimal International Reserves: A Stochastic Framework," Economic Journal, Royal Economic Society, vol. 91(362), pages 507-14, June.
  10. Graham Bird & Ramkishen Rajan, 2002. "The Political Economy of A Trade-First Approach to Regionalism," Centre for International Economic Studies Working Papers 2002-18, University of Adelaide, Centre for International Economic Studies.
  11. Hazel Selvon & Tracy Polius & Oral Williams, 2001. "Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone: A Comparative Analysis," IMF Working Papers 01/104, International Monetary Fund.
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Cited by:
  1. Pontines, Victor & Siregar, Reza, 2009. "Intervention index and exchange rate regimes: the cases of selected East-Asian economies," MPRA Paper 17138, University Library of Munich, Germany.

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