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International reserves and the maturity of external debt

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  • Qian, Xingwang
  • Steiner, Andreas

Abstract

This paper studies how the level of international reserves affects the maturity structure of external debt. We show in an illustrative theoretical model that reserves lengthen the maturity of external debt via a flattening of the yield curve. Using data of 66 emerging and developing countries and applying different econometric approaches, we find robust evidence that reserves increase the share of long-term in total external debt. Results hold for private and public external debt individually. Taking reserves and their effect on the debt maturity structure together, they reinforce financial stability.

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  • Qian, Xingwang & Steiner, Andreas, 2017. "International reserves and the maturity of external debt," Journal of International Money and Finance, Elsevier, vol. 73(PB), pages 399-418.
  • Handle: RePEc:eee:jimfin:v:73:y:2017:i:pb:p:399-418
    DOI: 10.1016/j.jimonfin.2017.02.015
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    Cited by:

    1. Joshua Aizenman & Yothin Jinjarak, 2019. "Hoarding for Stormy Days - Test of International Reserves Providing Financial Buffer Services," NBER Working Papers 25909, National Bureau of Economic Research, Inc.
    2. Qian, Xingwang & Steiner, Adreas, 2017. "The Reinforcement Effect of International Reserves for Financial Stability," Research Report 2017-018-GEM, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    3. Joshua Aizenman & Yothin Jinjarak, 2020. "Hoarding for stormy days—Test of international reserves adjustment providing financial buffer stock services," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 656-675, August.
    4. Chokri Zehri, 2020. "The Domestic Impacts And Spillovers Of Capital Controls," Economic Annals, Faculty of Economics, University of Belgrade, vol. 65(227), pages 31-66, October –.
    5. Chokri Zehri, 2020. "Capital controls to manage foreign exchange reserves and foreign debts," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(1), pages 271-294.

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    More about this item

    Keywords

    International reserves; External debt; Capital inflows; Debt maturity; Panel data analysis;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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