Análisis de Variación de Reservas Internacionales para Costa Rica

The purpose of the present document is to analyze the main factors that determine Central Bank foreign reserve accumulation in Costa Rica and to estimate an econometric specification to forecast the foreign reserve stock in a two-year span. The foreign reserves stock represents an important variable for the Central Bank of Costa Rica because it allows it to defend the present exchange rate regime of crawling-peg. Our results indicate that the interest rate premium, the real interest rate and the real exchange rate are important factors in the determination of the accumulations of foreign reserves. In addition, official capital flows have a positive effect on foreign reserve accumulation, while excess real money supply has a negative effect. The effect of an increase in interest rate premium on foreign reserves is smaller when it is produce by an increase on domestic interest rates, than when it reflects a decrease on the international interest rate. We set forth several hypotheses to explain this result. In within sample forecasts the model performs well, with a good fit and a 70% accuracy in the direction of the variations in foreign reserves.