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
Responses weighted by each expert's confidence
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 | ||
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 | ||
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 | ||
Really tough question. Outside.my expertise.
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Bengt Holmström |
MIT | Bio/Vote History | ||
Do not know broad evidence. Short time intervention could stem speculation. Long - term wasteful
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 | ||
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 | ||
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 | ||
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 | ||
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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