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Foreign Reserve Accumulation and Sterilization Effectiveness in Vietnam

  • Pham Thi Tuyet Trinh
  • Le Phan Ai Nhan
Conference paper
Part of the Studies in Computational Intelligence book series (SCI, volume 760)

Abstract

After Asia financial crisis, Vietnam was a persistent foreign reserve accumulator with two episodes of accumulation interrupted by the global financial crisis. The study explores the effectiveness of sterilizing monetary impact of reserve accumulation in both episodes. Employing two-stage least squares (2SLS) method to estimate simultaneous equations of central bank reaction and balance of payments functions, the study finds overall partial effectiveness of sterilization at 78%. The explanations of incomplete effectiveness sterilization are relied on high capital mobility and inappropriate scale and timing of interventions. Besides, the result of rolling estimation with 30 quarter-sample indicates the degree of sterilization tends to increase and higher in the second episode of reserve accumulation, which can be explained by the improvement of sterilization operation.

Keywords

Foreign reserve accumulation Sterilization effectiveness Vietnam 

JEL

E52 E58 F31 F41 

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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  1. 1.Banking University of Ho Chi Minh CityHo Chi Minh CityVietnam

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