Three essays on the dynamics of international reserve accumulation in emerging market economies

Among the many economic indicators that central bankers, financial market participants and the financial press perpetually keep tabs on, is the size of a country's international reserve holdings. A remarkable feature of the international financial system over the last two decades has been the worldwide rapid accumulation of foreign exchange reserves, especially by emerging market economies. My dissertation focuses on the dynamics of reserve accumulation in emerging markets. The first chapter investigates the impact of country level insurance in the form of reserve accumulation, on corporate risk taking in the form of dollar denominated debt in firms' balance sheets, in Latin American economies. The second chapter explores the Mrs.Machlup's Wardrobe hypothesis to understand whether the growing trend of Latin American economies amassing large stocks of international reserves cane be explained by a competitive hoarding behavior. In my final chapter, I calculate a financial trilemma index for India and investigate how its evolution over time has been impacted by the rapid rise of international reserves as a partially independent instrument of macroeconomic policy.