01914cas a2200265 a 4500 AALejournalIMF011356 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463923280 1018-5941 BD-DhAAL BD-DhAAL Dabla-Norris, Era. Optimal Precautionary Reserves for Low-Income Countries : A Cost-Benefit Analysis / Era Dabla-Norris, Jun Kim, Kazuko Shirono. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (35 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 develops a cost-benefit approach that helps to quantify the optimal level of international reserves in low-income countries, focusing on the role of reserves in preventing and mitigating absorption drops triggered by large external shocks. The approach is applied to a sample of 49 LICs over the period 1980-2008 to yield estimates of the likelihood and severity of a crisis. The calibration results suggest that the standard metric of three months of imports is inadequate for countries with fixed exchange rate regimes. The results also highlight the role of overall policy frameworks and availability of Fund-support in determining optimal reserve levels, raising questions about the uniform applicability of standard rules of thumb across countries. Mode of access: Internet Kim, Jun. Shirono, Kazuko. IMF Working Papers; Working Paper ; No. 2011/249 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/249/001.2011.issue-249-en.xml IMF e-Library