Studies Conducted at Federal University Bahia on Emerging Markets Recently Reported (International Reserves: Self-insurance and Monetary Policy In Crisis)

2021 MAY 20 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Investigators publish new report on Emerging Markets. According to news originating from Salvador, Brazil, by NewsRx editors, the research stated, “This work presents a model of a two-period economy to discuss the link between the precautionary motivation for holding international reserves and the country’s monetary policy concerns due to a crisis. Design/methodology/approach There are two possible states of nature in the second period of the economy: a normal state and a crisis state.”

Financial support for this research came from Coordenacao de Aperfeicoamento de Pessoal de Nivel Superior (CAPES).

Our news journalists obtained a quote from the research from Federal University Bahia, “These states of nature represent uncertainty to the policy maker and he can insure against a crisis. The household has a constant-elasticity-of-substitution (CES) utility function, where utility depends on consumption and money. By allowing money in the utility function and in the household financial constraint and considering that the objective of the central bank is to smooth inflation, it is concluded that monetary policy plays a role in the precautionary motivation of holding international reserves. Practical implications The model can be used to calculate optimal reserves holdings in its complete or even in its simplified version. Furthermore, it is possible to evaluate the impact of the intra-temporal substitution elasticity between consumption and real money in the decision of accumulating international reserves.”

According to the news editors, the research concluded: “Originality/value Higher intra-temporal substitution elasticities implies in more insurance via international reserves, and this discussion is not found in the existent literature on international reserves.”

This research has been peer-reviewed.

For more information on this research see: International Reserves: Self-insurance and Monetary Policy In Crisis. International Journal of Emerging Markets, 2020. International Journal of Emerging Markets can be contacted at: Emerald Group Publishing Ltd, Howard House, Wagon Lane, Bingley BD16 1WA, W Yorkshire, England. (Emerald Group Publishing - www.emeraldinsight.com; International Journal of Emerging Markets - http://www.emeraldinsight.com/journals.htm?issn=1746-8809)

The news correspondents report that additional information may be obtained from Antonio Francisco de Almeida da da Silva Junior, Federal University Bahia, Dept. of Business Administration, Salvador, Ba, Brazil.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1108/IJOEM-09-2019-0677. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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