Experience over the past 30 years shows that for the typical emerging market nation facing rapid capital outflows, spending foreign currency reserves to defend its currency is a better policy for its citizens than not doing so.
Responses
© 2025. Kent A. Clark Center for Global Markets.
11%
22%
5%
27%
30%
3%
3%
Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
15%
35%
40%
4%
5%
Participant |
University |
Vote |
Confidence |
Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Raj Chetty |
Harvard | Bio/Vote History | ||
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 Janet Currie |
Princeton | Bio/Vote History | ||
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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Better to allow to devaluation of the currency, promoting exports and not wasting valuable FX reserves, as defense is not likely to succeed.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Whether intervention is wise depends on why capital is flowing out (bad policies or unfounded panic). In the first case it's hopeless.
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Austan Goolsbee |
Chicago | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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Really tough question. Outside.my expertise.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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Do not know broad evidence. Short time intervention could stem speculation. Long - term wasteful
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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The right answer depends on the circumstances, especially whether permanent or temporary events account for outflows. Usually: disagree.
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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Efforts to maintain an overvalued currency will likely exhaust those reserves before they stop the outflows.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Depends on the particulars, but it is usually better to fix the problem that is causing the reversal.
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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Reserve management has not prevented "Sudden Stops" from being a major source of emerging market business cycles.
-see background information here |
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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One should use reserves to defnd the financial system (notably banks with USD liabilities), not the "currency" (exchange rate) per se.
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Hyun Song Shin |
Princeton | Did Not Answer | Bio/Vote History | |
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 Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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 Luigi Zingales |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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