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For a few dollars more: Reserves and growth in times of crises

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  • Bussière, Matthieu
  • Cheng, Gong
  • Chinn, Menzie D.
  • Lisack, Noëmie

Abstract

Based on a dataset of 112 emerging economies and developing countries, this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008–09 financial crisis. More specifically, the paper investigates the relation between international reserves and the existence of capital controls. We find that the level of reserves matters: countries with high reserves relative to short-term debt suffered less from the crisis, particularly when associated with a less open capital account. This suggests some degree of complementarity between reserve accumulation and capital controls.

Suggested Citation

  • Bussière, Matthieu & Cheng, Gong & Chinn, Menzie D. & Lisack, Noëmie, 2015. "For a few dollars more: Reserves and growth in times of crises," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 127-145.
  • Handle: RePEc:eee:jimfin:v:52:y:2015:i:c:p:127-145
    DOI: 10.1016/j.jimonfin.2014.11.016
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    More about this item

    Keywords

    Foreign reserves; Capital controls; Financial crises; Economic growth;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G01 - Financial Economics - - General - - - Financial Crises

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