International Reserves x Crisis (Silva Jr.)

The self-insurance role of international reserves and the 2008-2010 crisis by Antonio Francisco A. Silva Jr. “The literature suggests that the benefits of holding reserves are high, but the accumulation of reserves is a costly strategy. The strategy of accumulating international reserves is evaluated here using data from the 2008-2010 crisis and it is shown that countries with higher international reserve levels had less adjustment costs between 2008 and 2010. The cost-benefit relationship of holding reserves in the 2008-2010 crisis is also discussed based on a sample with 71 countries.”