Finance:Guidotti–Greenspan rule
The Guidotti–Greenspan rule is an international economics guideline that states that a country's reserves should equal short-term external debt (one-year or less maturity), implying a ratio of reserves-to-short term debt of 1.[1][2][3] The rationale is that countries should have enough reserves to resist a massive withdrawal of short term foreign capital. The rule is named after Pablo Guidotti – Argentine former deputy minister of finance – and Alan Greenspan – former chairman of the Federal Reserve Board of the United States. Guidotti first stated the rule in a G-33 seminar in 1999, while Greenspan widely publicized it in a speech at the World Bank.[4] In subsequent research Guzman Calafell and Padilla del Bosque found that the ratio of reserves to external debt is a relevant predictor of an external crisis.[5]
References
- ↑ "Capital flows from the South to the North: a new dynamic in global economic relations" (PDF). South Centre. August 2008. http://www.southcentre.org/index2.php?option=com_docman&task=doc_view&gid=1059&Itemid=69. Retrieved 2009-12-01.
- ↑ Green, Russell; Tom Torgerson (March 2007). "Are High Foreign Exchange Reserves in Emerging Markets a Blessing or a Burden?" (PDF). United States Department of the Treasury. http://treas.tpaq.treasury.gov/offices/international-affairs/occasional-paper-series/docs/reserves.pdf. Retrieved 2009-12-01.
- ↑ Jeanne, Olivier; Romain Rancière (October 2006). "The Optimal Level of International Reserves for Emerging Market Economies: Formulas and Applications" (PDF). International Monetary Fund. http://www.imf.org/external/pubs/ft/wp/2006/wp06229.pdf. Retrieved 2009-12-01.
- ↑ Greenspan, Alan (April 29, 1999). "Currency reserves and debt". Federal Reserve System. http://www.federalreserve.gov/BoardDocs/Speeches/1999/19990429.htm. Retrieved 2009-12-01.
- ↑ Calafell, Javier; Rodolfo Padilla del Bosque (2002). "The Ratio of International Reserves to Short-Term External Debt as Indicator of External Vulnerability: Some Lessons From the Experience of Mexico and Other Emerging Economies" (PDF). http://g24.org/wp-content/uploads/2014/03/Session-1_56.pdf. Retrieved 2015-05-05.
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