Comparative Economic Studies

, Volume 56, Issue 2, pp 229–252 | Cite as

Exchange Rate Implications of Reserve Changes: How Non-EZ European Countries Fared during the Great Recession

  • Kathryn Dominguez
Symposium Article
First Online:

Abstract

The relationships between exchange rates, capital controls and foreign reserves during the financial crisis suggest that reserve management plays a much more central role than has typically been emphasized in international finance models. Reserves seem to be especially important for non-EZ European countries, not only for those with currencies in the ERM II, but also for those European countries in intermediate regimes that hope to deter currency market pressure, and in so doing help to mitigate trilemma trade-offs.

Keywords

foreign exchange reserves global financial crisis exchange market pressure 

JEL Classifications

F32 F41 
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Notes

Acknowledgements

This paper was presented at the 19th Dubrovnik Economic Conference in June 2013. I am grateful to my discussant, Randy Filer, as well as many of the conference participants for very useful comments and suggestions that have greatly improved the paper. All remaining errors are my own.

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Copyright information

© Association for Comparative Economics 2014

Authors and Affiliations

  • Kathryn Dominguez
    • 1
  1. 1.University of MichiganAnn ArborUSA

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