Abstract
The first and foremost distinction to be made is that of the need for reserves of individual countries under stable exchange rates and under flexible exchange rates. Both the aspects of the level and growth of reserves are discussed in the context of these two categories of exchange rate regimes. Attention is also given to reserve need problems connected with capital movements. Although the need for reserves is first treated from the point of view of individual countries in general, the specific reserve needs of certain categories of countries (reserve currency countries, open economies, developing countries, and oil exporting countries) are also discussed.
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References
Cf. pp. 88, 89 above.
Article IV, Section 5(a) of the Articles of Agreement of the IMF state that countries shall not propose changes in the par values of their currencies except to correct a fundamental disequilibrium. In the proposed second amendment of the Articles this concept is no longer mentioned, however.
It is a well-known phenomenon that exchange rate changes take considerable time to have their full effects, and that they initially tend to produce perverse balance of payments effects; cf., for instance, Helen B. Junz and Rudolf R. Rhomberg, “Price Competitiveness in Export Trade among Industrial Countries”, American Economic Review, May 1973.
Cf. sections iii and iv of chapter 4.
For instance, in order to take into account the effects of a certain degree of liquidity creation which will be very hard to avoid under inflationary conditions (cf. p. 47 above).
The marginal propensity to import can be defined so as to include services beside merchandise imports. Johnson included securities along with goods and services in his version of the monetary approach; cf. p. 52 above. Under Holtrop’s approach capital flows could in principle also be included.
Cf. pp. 99–101 above.
Cf. p. 105 above.
The need for reserves of open economies is discussed in section ix of this chapter.
Cf. p. 105 above.
Cf. pp. 107, 108 above.
Some of the views expressed here were previously set out in an article by the author; cf. J.A.H. de Beaufort Wijnholds, “The Need for Reserves Under Full and Limited Flexibility of Exchange Rates”, De Economist, No. 3, 1974.
Cf. section i of chapter 7.
The situation is the same as that depicted in figure 5 on p. 179 above.
Cf. pp. 104, 105 above.
Cf. p. 100 above.
Cf. pp. 166–170 above.
An indication of the marginal productivity of capital in individual developing countries may be obtained by comparing the (macro) economic rate of return as calculated by such institutions as the World Bank for the various projects they help to finance. For the methods used in such calculations cf., for instance, Deepak Lai, Methods of Project Analysis: A Review, World Bank Staff Occasional Papers No. 16, Baltimore, 1974.
Cf., for instance, the argumentation by Cohen, pp. 142, 143 above. A rough quantitative indication may be provided by the greater instability of export receipts of developing countries as compared to industrialized countries. In a joint IMF/World Bank study it was shown that for the period 1950–1965 the average fluctuations in export earnings of the developing countries was about twice as large as those of the industrialized countries; cf. The Problem of Stabilization of Prices of Primary Products, Washington, 1969, pp. 40–42. This result is roughly confirmed for more recent years by IMF data.
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de Beaufort Wijnholds, J.A.H. (1977). Reserve needs of individual countries and country groups. In: The Need for International Reserves and Credit Facilities. Publication of the Netherlands Institute of Bankers and Stock Brokers, vol 31. Springer, Boston, MA. https://doi.org/10.1007/978-1-4684-6954-7_11
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DOI: https://doi.org/10.1007/978-1-4684-6954-7_11
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