Sterilization, Monetary Policy, and Global Financial Integration

25 Pages Posted: 15 Oct 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

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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.

Suggested Citation

Aizenman, Joshua and Glick, Reuven, Sterilization, Monetary Policy, and Global Financial Integration. Review of International Economics, Vol. 17, No. 4, pp. 777-801, September 2009. Available at SSRN: https://ssrn.com/abstract=1489037 or http://dx.doi.org/10.1111/j.1467-9396.2009.00848.x

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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