Does it matter how central banks accumulate reserves? Evidence from sovereign spreads

• 成果类型: Article
• 署名作者: Sosa-Padilla, Cesar; Sturzenegger, Federico
• 署名单位: National Bureau of Economic Research; University of Notre Dame; Universidad de San Andres Argentina
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2022.103711
• 发表日期: 2023
• 关键词: International reserves; contingent debt; sovereign default; country spreads

摘要

There has been substantial research on the benefits of accumulating foreign reserves, but less on the relative merits of how these reserves are accumulated. In this paper we explore whether the form of accumulation affects country risk. We first present a model of endogenous sovereign debt defaults, where we show that reserve accumulation through the issuance of debt contingent on local output reduces spreads in a way that reserve accumulation with for-eign borrowing does not. We confirm this model prediction when taking the theory to the data. These results suggest that attention should be placed on the way reserves are accumu-lated, a distinction that has important practical implications. In particular, our results call into question the benefits of programs of reserves strengthening through external debt such as those typically implemented by multilateral organizations.(c) 2022 Elsevier B.V. All rights reserved.