Hoarding of international reserves : Mrs Machlup's Wardrobe and the Joneses
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Detail(s)
Original language | English |
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Pages (from-to) | 824-843 |
Journal / Publication | Review of International Economics |
Volume | 17 |
Issue number | 4 |
Publication status | Published - 2009 |
Externally published | Yes |
Link(s)
Abstract
Motivated by the observed international reserve hoarding behavior in the post-1997 crisis period, we explore the Mrs Machlup's Wardrobe hypothesis and the related keeping up with the Joneses argument. It is conceived that, in addition to psychological reasons, holding a relatively high level of international reserves reduces the vulnerability to speculative attacks and promotes growth. A stylized model is constructed to illustrate this type of hoarding behavior. The relevance of the keeping up with the Joneses effect is examined using a few plausible empirical specifications and data from 10 East Asian economies. Panel-based regression results are suggestive of the presence of the Joneses effect, especially in the post-1997 crisis period. © 2009 Blackwell Publishing Ltd.
Citation Format(s)
Hoarding of international reserves : Mrs Machlup's Wardrobe and the Joneses. / Cheung, Yin-Wong; Qian, Xingwang.
In: Review of International Economics, Vol. 17, No. 4, 2009, p. 824-843.Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review