Resource title

Hoarding of international reserves: Mrs Machlup's wardrobe and the joneses

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Resource description

Motivated by the observed international reserve hoarding behavior in the post-1997 crisis period, we explore the Mrs Machlup s wardrobe hypothesis and the related keeping up with the Joneses argument. It is conceived that, in addition to psychological reasons, holding a relatively high level of international reserves reduces the vulnerability to speculative attacks and promotes growth. A stylized model is constructed to illustrate this type of hoarding behavior. The relevance of the keeping up with the Joneses effect is examined using a few plausible empirical specifications and data from 10 East Asian economies. Panel-based regression results are suggestive of the presence of the Joneses effect; especially in the post-1997 crisis period. Individual economy estimation results, however, show that the Joneses effect varies across economies.

Resource author

Yin-Wong Cheung, Xingwang Qian

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26110

Resource license

Adapt according to the presented license agreement and reference the original author.