International Reserves in Low Income Countries: Have They Served as Buffers?

Crispolti, Valerio; Tsibouris, George

doi:10.2139/ssrn.1997720

Cited by 3 publications

(3 citation statements)

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“…National savings are associated with resilience because, if an economy suffers from chronic savings shortages, it will not have room for manoeuvre in the face of adverse shocks. For a discussion of external reserves in terms of coverage of monthly imports and resilience, see Crispolti and Tsibouris (2011).…”

Section: Discussionmentioning

confidence: 99%

Building the Resilience of Small States

2014

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2.5.7 Resilience index components 2.5.8 Economic resilience index (ERI) 2.6 The revised vulnerability/resilience framework 2.6.1 Juxtaposing vulnerability and resilience 2.6.2 Country comparisons 2.7 Policy implications 2.7.1 Uses of the vulnerability and resilience indices 2.7.2 Policy implications at the national level 2.7.3 Policy implication at the international level 2.8 Conclusion Notes References Appendix 2.1 Data for the economic vulnerability index 2.1a The economic vulnerability index and its components 2.1b Sources of the EVI data 2.1b(i) Trade openness (OPN) 2.1b(ii) Export concentration (EXN) 2.1b(iii) Dependence on strategic imports (DSI) 2.1b(iv) Proneness to natural disasters (DST) 2.1b(v) The vulnerability index (EVI and EVI RS) Appendix 2.2 Data for the economic resilience index 2.2a The economic resilience index and its components 2.2b Sources of the ERI data 2.2b(i) Macroeconomic stability (STB) 2.2b(ii) Market flexibility (MFX) 2.2b(iii) Financial riskiness (FNR) 2.2b(iv) The adjusted market flexibility index (AMFX) 2.2b(v) Political governance 2.2b(vi) Social development (SOC) 2.2b(vii) Environment management (ENV) 2.2b(viii) The economic resilience index (ERI and ERI RS) 3 Developing a Governability Assessment Framework in the Context of Resilience Building in Small States

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Section: Discussionmentioning

confidence: 99%

Building the Resilience of Small States

2014

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“…From an insurance perspective, reserves can help reduce the likelihood and magnitude of abrupt drops in consumption and absorption, and consequently a loss in welfare, arising from large fluctuations in imports in the face of large external shocks. As documented by Crispolti and Tsibouris (2011), reserves appear to have cushioned countries against sharp drops in consumption and absorption for a wide range of shocks considered, including during the recent financial crisis. For instance, they find that cumulative consumption losses over a fiveyear period-measured as yearly loss relative to the pre-shock three-year trend growthwere quite substantial for past external demand and terms-of-trade shocks, at about 6-17 percentage points for countries with reserve coverage of less than three months of imports, whereas the impact was limited among those with higher coverage.…”

Section: Analytical Frameworkmentioning

confidence: 99%

“…It is well documented that weakly diversified economic structures and reliance on international trade to import large quantities of essential goods render low-income countries vulnerable to significant fluctuations in consumption in the event of external shocks. 2 An event study analysis by Crispolti and Tsibouris (2011) finds that low-income countries with reserve cover more than three months of imports were better able to smooth consumption and absorption in the face of external shocks relative to those with lower coverage. Their analysis also points to the importance of country characteristics and vulnerabilities in assessing reserve adequacy: the shock-mitigation effect of reserves was found to be particularly pronounced, for instance, in highly indebted economies, small islands, commodity exporters, and countries with fixed exchange rate regimes This paper presents a simple cost-benefit framework of precautionary reserve holdings warranted by country characteristics and fundamentals.…”

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Optimal Precautionary Reserves for Low-Income Countries: A Cost-Benefit Analysis

2011

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Long Neglected Facts and the Vicious Circular Mechanism Behind the Middle-income Trap: An Explanation from the Debt Crisis Perspective

Zhou¹

2021

Proceedings of the 1st International Symposium on Innovative Management and Economics (ISIME 2021)

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The "middle-income trap" refers to the phenomenon that an economy stagnates for a long time after its income per capita achieves the middle level of the world, which frequently occurs in developing countries. Taking Latin America as an example, the author establishes a unified framework that includes other explanations from the perspective of the debt crisis for research. Adopting multiple methods including literature and case study, data analysis and mechanism reasoning, the main conclusions are as follows. First, middle-income economies bear a higher actual risk of external debt problems. Second, debt crises cause permanent losses and the recovery tends to be less effective in the middle-income group than others. Third, a lower yet concealed debt ratio threshold in the middle-income economies misleads the state government's decision-making on borrowing. Finally, "debtcrisis-recovery-debt", the vicious circle, systematically reveals the essence of the "middle-income trap" in the debtor countries, excessive sovereign debt serves as both the trigger and the accelerator in the collapsing process.

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International Reserves in Low Income Countries: Have They Served as Buffers?

Cited by 3 publications

References 3 publications

Building the Resilience of Small States

Building the Resilience of Small States

Optimal Precautionary Reserves for Low-Income Countries: A Cost-Benefit Analysis

Long Neglected Facts and the Vicious Circular Mechanism Behind the Middle-income Trap: An Explanation from the Debt Crisis Perspective

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