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International Reserves—Too Much of a Zipf’s Thing
Author:
Mariusz A. Sumlinski
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Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 011
Language:
English
Publication Date:
01 Jan 2008
DOI:
https://doi.org/10.5089/9781451868739.001
ISBN:
9781451868739
ISSN:
1018-5941
Pages:
19
Keywords:
WP; law influence; growth rate; reserve
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Concentrated distribution of international reserves is puzzling. I show that the growth rates of international reserves bear only a very weak relationship to their initial stocks (scaled by GDP or in absolute terms), and that, by implication, the cross-sectional distribution of reserves conforms to Zipf's law. The law states that the size of reserves is inversely related to their ranking. Evidence in favor of the law is strong and time robust. I compare the crosssection distribution of international reserves embedded in the WEO projections to that implied by Zipf's law and find that international reserves are much less concentrated in the WEO projections than implied by Zipf's law.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund