Debt redemption, reserve accumulation, and exchange-rate regimes
By: Laura Alfaro, Fabio Kanczuk
Contributors: Kanczuk, Fabio, 1969- author; Harvard Business School
Series: Working paper / Harvard Business School -- 13-074; Working paper (Harvard Business School) -- 13-074.
Publisher: Harvard Business School
Published: 2014
Place of publication: Boston ]
Language: eng
Number of pages: 34
Work titles: Carry trade, reserve accumulation, and exchange-rate regimes
Description: Foreign participation in local-currency-bond markets in emerging countries has increased dramatically over the past decade. In light of this trend, we revisit the question of the optimal exchange-rate regime when developing countries can borrow internationally with local-currency-denominated debt. We find that, as local-currency-bond markets develop, a "pseudo-flexible regime," whereby a country accumulates reserves in conjunction with debt, is the policy that most effectively stabilizes fluctuations under real external shocks.
Notes: "February 2013. (Revised June 2013, July 2014)." -- Publisher's website.

Revision of Carry trade, reserve accumulation, and exchange-rate regimes.

Includes bibliographical references (pages 25-29).