01672cas a2200241 a 4500 AALejournalIMF009986 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451951844 1018-5941 BD-DhAAL BD-DhAAL International Monetary Fund. External Adjustment and the Optimal Demand for International Reserves. Washington, D.C. : International Monetary Fund, 1989. 1 online resource (30 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 This paper provides a theoretical underpinning for the major determinants of optimal reserve demand in the case where fundamental disequilibrium constitutes a key element governing reserve management. Emphasis is given to the role of reserves to smooth the process of economic adjustment by financing part of external disequilibrium, as well as to meet temporary random fluctuations in the excess demand for foreign exchange. The analysis incorporates this financing aspect of reserve holdings into a simple inventory model and discusses the optimal stock of reserves in the context of the optimal mix of adjustment and financing. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1989/090 Full text available on IMF http://elibrary.imf.org/view/journals/001/1989/090/001.1989.issue-090-en.xml IMF e-Library