International Reserve Adequacy in The Gambia

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Price:  $18.00

Author/Editor: Eugen Tereanu
Release Date: © September, 2010
ISBN : 978-1-45520-880-7
Stock #: WPIEA2010215
English
Stock Status: On back-order

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Description

This paper applies intertemporal models of precautionary saving to compute an optimal level of international reserves for The Gambia. The analysis focuses on current account shocks specific to a low-income economy with a significant import component and complements a more standard, rule-of-thumb reserve adequacy assessment. The results suggest a central range from 4.5 months to 7 months of imports, which is broadly aligned with the recent actual coverage. Notwithstanding parameter sensitivity, the simulations allow for more informed policy decisions that balance flexibility with a prudent approach to reserve use.

Taxonomy

Balance of payments , Economic policy , Foreign exchange , Monetary policy , Reserves




More publications in this series: Working Papers


More publications by: Eugen Tereanu