Work

Financial Versus Monetary Mercantilism-Long-run View of Large International Reserves Hoarding

Year: 2006

Type: report

Abstract: The sizable hoarding of international reserves by several East Asian countries has been frequently attributed to a modern version of monetary mercantilism --hoarding international reserves in order to improve competitiveness.From a long-run perspective, manufacturing exporters in East Asia adopted financial mercantilism --subsidizing the cost of capital --during decades of high growth.They switched to hoarding large international reserves when growth faltered, making it harder to disentangle the monetary mercantilism from precautionary response to the heritage of past financial mercantilism.Monetary mercantilism also lowers the cost of hoarding, but may be associated with negative externalities leading to competitive hoarding.

Source: National Bureau of Economic Research

DOI: 10.3386/w12718

Authors: Joshua Aizenman, Jaewoo Lee

Institutions: National Bureau of Economic Research, University of California, Santa Cruz, International Monetary Fund

Language: English

Topic: Global Financial Crisis and Policies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W4289254154

Cites: 34

Cited by: 26

Related to: 10