Abstract
We present a model that determines both monetary policy and level of international reserves. Strict monetary policy would build precautionary reserves that allow future monetary policy to better stabilize inflation and output and lower the likelihood of forthcoming financial crisis.
Original language | English |
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Pages (from-to) | 170-178 |
Number of pages | 9 |
Journal | Economics Letters |
Volume | 97 |
Issue number | 2 |
DOIs | |
State | Published - Nov 2007 |
Keywords
- Drift control
- International reserves
ASJC Scopus subject areas
- Finance
- Economics and Econometrics