Reserve Accumulation, Macroeconomic Stabilization, and Sovereign Risk

• 成果类型: Article; Early Access
• 署名作者: Bianchi, Javier; Sosa-Padilla, Cesar
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Notre Dame; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdad075
• 发表日期: 2023
• 关键词: International reserves; optimal maturity; sudden stops; fiscal rules; default; debt; precautionary; DISCRETION; crises

摘要

In the past three decades, governments in emerging markets have accumulated large amounts of international reserves, especially those with fixed exchange rates. This article proposes a theory of reserve accumulation that can account for these facts. Using a model of endogenous sovereign default with nominal rigidities, we argue that the interaction between sovereign risk and aggregate demand amplification generates a macroeconomic-stabilization hedging role for international reserves. We show that issuing debt to purchase reserves during good times allows the government to stabilize aggregate demand when sovereign spreads rise and rolling over the debt becomes more expensive. We provide empirical evidence consistent with the model's predictions.