Sterilization, Monetary Policy, and Global Financial Integration

40 Pages Posted: 11 Mar 2009

See all articles by Joshua Aizenman

Joshua Aizenman

National Bureau of Economic Research (NBER)

Reuven Glick

Federal Reserve Bank of San Francisco - Center for Pacific Basin Monetary & Economic Studies

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2008

Abstract

This paper investigates the changing pattern and efficacy of sterilization within emerging market countries as they liberalize markets and integrate with the world economy. We estimate the marginal propensity to sterilize foreign asset accumulation associated with net balance of payments inflows, across countries and over time. We find that the extent of sterilization of foreign reserve inflows has risen in recent years to varying degrees in Asia as well as in Latin America, consistent with greater concerns about the potential inflationary impact of reserve inflows. We also find that sterilization depends on the composition of balance of payments inflows.

Keywords: foreign reserves, international reserves, sterilization, global financial integration

JEL Classification: F15, F21, F31

Suggested Citation

Aizenman, Joshua and Glick, Reuven, Sterilization, Monetary Policy, and Global Financial Integration (July 1, 2008). Available at SSRN: https://ssrn.com/abstract=1356195 or http://dx.doi.org/10.2139/ssrn.1356195

Joshua Aizenman (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Reuven Glick

Federal Reserve Bank of San Francisco - Center for Pacific Basin Monetary & Economic Studies ( email )

101 Market Street
San Francisco, CA 94105
United States
415-974-3184 (Phone)
415-974-2168 (Fax)

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