01760cas a2200253 a 4500 AALejournalIMF009138 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451864892 1018-5941 BD-DhAAL BD-DhAAL Ranciere, Romain. The Optimal Level of International Reserves for Emerging Market Countries : Formulas and Applications / Romain Ranciere, Olivier Jeanne. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (33 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We present a model of the optimal level of international reserves for a small open economy that is vulnerable to sudden stops in capital flows. Reserves allow the country to smooth domestic absorption in response to sudden stops, but yield a lower return than the interest rate on the country's long-term debt. We derive a formula for the optimal level of reserves, and show that plausible calibrations can explain reserves of the order of magnitude observed in many emerging market countries. However, the recent buildup of reserves in Asia seems in excess of what would be implied by an insurance motive against sudden stops. Mode of access: Internet Jeanne, Olivier. IMF Working Papers; Working Paper ; No. 2006/229 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/229/001.2006.issue-229-en.xml IMF e-Library