Juan Elias

Date of Award

2013

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Keywords

Intervention, Sterilization, Economics

Area of Concentration

Economics

Abstract

This thesis is an inquiry into the recent trend of EMEs International Reserves accumulation. As it has been noticed by the academic community, EMEs have been accumulating massive amounts of reserves since the 90s for many different reasons. As this thesis suggests, the main two reasons for countries to intervene in the FOREX market are cautionary and mercantilist. The Monetary trajectory and mechanisms of two small open economies of equal size and region (Peru and Colombia) will be studied; and their respective sterilization coefficients will be found in order to quantify the research. Both countries manifest high degrees of partial sterilization, which means the coefficients were barely lower than 1. Sterilizing most of their intervention helps the country maintain a stable monetary base, buffering against inflationary risks. The high degree of intervention and the high degree of sterilization suggest that both countries engage in dual anchors: exchange rate volatility, and the money supply.

Rights

This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.

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