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Author/Editor:
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Choi, Woon Gyu ; Sharma, Sunil ; Strömqvist, Maria
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Publication Date:
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July 01, 2007
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Electronic Access:
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Free Full text
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper examines the interaction between capital flows and international reserve holdings in the context of increasing financial integration. For emerging markets the sensitivity of reserves to net capital flows was negative in the 1980s, but became positive after the Asian crisis when these countries used net capital flows to build up reserves. For advanced countries, net capital flows had a negative effect on reserves, especially in recent years. Using measures of financial globalization, we also provide evidence that the sensitivity of reserves to net capital flows increased with globalization for emerging markets while it decreased for advanced countries.
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Order a print copy
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Series:
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Working Paper No. 07/151
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Subject(s):
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Capital flows | Financial integration | Reserves | Liquidity
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Author's Keyword(s):
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International reserves | capital flows | financial integration | sovereign liquidity | stockpiling motive | panel data |
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