Jordan's International Reserve Position: Justifiably Strong

21 Pages Posted: 8 May 2007

See all articles by Saade Chami

Saade Chami

International Monetary Fund (IMF)

Donal McGettigan

International Monetary Fund (IMF) - Policy Development and Review Department

Stanley Watt

International Monetary Fund (IMF)

Date Written: May 2007

Abstract

Jordan has seen a large increase in its international reserve holdings in recent years. While a healthy reserve buffer is needed under a fixed exchange rate regime, determining optimal reserve levels is not straightforward. In this paper, we first use several traditional measures of reserves adequacy to compare Jordan's reserve holdings with other emerging market (EM) countries. Subsequently, we analyze Jordan's reserve holdings using a reserves-optimizing model, based on Jeanne and Ranciere (2006) (J-R), but extended to allow reserve holdings to influence the likelihood of a sudden stop. The overall analysis suggests that Jordan's reserve holdings provide sufficient support to sustain the dinar peg and to deal with the most extreme capital account disruptions.

Suggested Citation

Chami, Saade and McGettigan, Donal and Watt, Stanley, Jordan's International Reserve Position: Justifiably Strong (May 2007). IMF Working Papers, Vol. , pp. 1-19, 2007. Available at SSRN: https://ssrn.com/abstract=984608

Saade Chami (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Donal McGettigan

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Stanley Watt

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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