Accumulation of reserves and keeping up with the Joneses : The case of LATAM economies

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

20 Scopus Citations
View graph of relations



Original languageEnglish
Pages (from-to)19-31
Journal / PublicationInternational Review of Economics and Finance
Issue number1
Publication statusPublished - Jan 2011
Externally publishedYes


In this paper we explore the 'Mrs. Machlup's Wardrobe' hypothesis to understand the growing trend of Latin American economies amassing large stocks of international reserves. Using annual data from 1980 to 2007, we examine the relevance of the argument that economies continue to add to their existing reserves stock in order to keep up with the Joneses. We find strong evidence of presence of the Joneses effect. The effect is robust to the inclusion of traditional determinants of reserve accumulation as well as region specific factors including commodity exports that set the Latin American economies apart from other emerging economies. © 2010 Elsevier Inc.

Research Area(s)

  • 'Mrs. Machlup's Wardrobe' hypothesis, Competitive hoarding, Demand for international reserves, Financial crisis, Speculative attack