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Hoarding of International Reserves: Mrs Machlup’s Wardrobe and the Joneses Author info | Abstract | Publisher info | Download info | Related research | Statistics Yin-Wong Cheung ()
Xingwang Qian ()
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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. Individual economy estimation results, however, show that the Joneses effect varies across economies.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 2065.
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Date of creation: 2007Date of revision:
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Keywords: demand for international reserves ; excessive international reserve accumulation ; speculative attack ; keeping up with the Joneses ; Find related papers by JEL classification: F30 - International Economics - - International Finance - - - General F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.:
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Joshua Aizenman, 2007.
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Other versions: Wong, Clement Yuk-pang & Cheung, Yin-Wong, 2008.
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Economics - The Open-Access, Open-Assessment E-Journal ,
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