TY - JOUR
T1 - Accumulation of reserves and keeping up with the Joneses
T2 - The case of LATAM economies
AU - Cheung, Yin-Wong
AU - Sengupta, Rajeswari
PY - 2011/1
Y1 - 2011/1
N2 - 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.
AB - 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.
KW - 'Mrs. Machlup's Wardrobe' hypothesis
KW - Competitive hoarding
KW - Demand for international reserves
KW - Financial crisis
KW - Speculative attack
UR - http://www.scopus.com/inward/record.url?scp=78049530774&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-78049530774&origin=recordpage
U2 - 10.1016/j.iref.2010.07.003
DO - 10.1016/j.iref.2010.07.003
M3 - RGC 21 - Publication in refereed journal
SN - 1059-0560
VL - 20
SP - 19
EP - 31
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
IS - 1
ER -
