International reserves management and capital mobility in a volatile world
Subtitle: Policy considerations and a case study of Korea
By: Joshua Aizenman, Yeonho Lee, Yeongseop Rhee.
Contributors: Lee, Yeonho.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10534; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10534.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Financial crises -- Korea (South) -- History -- 20th century.; Capital movements -- Korea (South) -- History -- 20th century.; International liquidity.
Description: "This paper characterizes the precautionary demand for international reserves driven by the attempt to reduce the incidence of costly output decline induced by sudden reversal of short-term capital flows.  It validates the main predictions of the precautionary approach by investigating changes in the patterns of international reserves in Korea in the aftermath of the 1997-8 crisis.  This crisis provides an interesting case study, especially because of the rapid rise in Korea's financial integration in the aftermath of the East-Asian crisis, where foreigners' shareholding has increased to 40% of total Korean market capitalization.  We show that the crisis led to structural change in the hoarding of international reserves, and that the Korean monetary authority gives much greater attention to a broader notion of 'hot money,' inclusive of short-term debt and foreigners' shareholding"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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