I. Precautionary reserves : an application to Bolivia -- II. Hydrocarbon revenue sharing arrangements
Summary
1. Over the last few years, Bolivia accumulated unprecedented levels of foreign reserves resulting in a sharp improvement of its international investment position to become a net external creditor in 2008. The main contributor to this development was the also record-high current account surplus that followed from high export prices over 2005-08.2 As the cycle turns around and the significant current account surplus vanishes, obtaining estimates of an optimal level of reserves becomes highly relevant for economic policy design
