THE IMPACT OF POLICY UNCERTAINTY ON CENTRAL BANK RESERVES: THE EXAMPLE OF THE FRAGILE FIVE

Abstract

In recent years, the global economic outlook has been shaped by increasing geopolitical risks, financial vulnerabilities, and policy uncertainties. The economies of Turkey, Brazil, India, Indonesia, and South Africa, known as the Fragile Five, are among the countries most affected by these uncertainties due to their high external financing dependence. This study analyzes the relationship between economic policy uncertainty (EPU) and international reserve adequacy over the 2005–2025 period. The effects of economic policy uncertainty on central banks' reserve accumulation behavior are examined within the framework of panel data analysis. According to the Guidotti–Greenspan rule and the IMF's ARA metric, reserve adequacy is found to vary significantly across countries. Turkey and South Africa are found to have insufficient reserve buffers, while India, Indonesia, and Brazil exhibit stronger positions. CIPS and CADF unit root tests, which take into account cross-sectional dependence, along with the CCEMG and AMG estimators, are used, and analysis is conducted using the panel causality methods of Driscoll-Kraay and Dumitrescu & Hurlin (2012). It has been observed that increasing policy uncertainty strengthens the tendency to accumulate reserves, especially in countries with high external financing dependency.

Keywords

• Macroeconomic Uncertainty
• Monetary Policy
• Reserve Management
• Financial Stability

THE IMPACT OF POLICY UNCERTAINTY ON CENTRAL BANK RESERVES: THE EXAMPLE OF THE FRAGILE FIVE

Abstract

Son yıllarda küresel ekonomik görünüm; artan jeopolitik riskler, finansal kırılganlıklar ve politika belirsizlikleriyle şekillenmiştir. Kırılgan Beşli olarak adlandırılan Türkiye, Brezilya, Hindistan, Endonezya ve Güney Afrika ekonomileri, yüksek dış finansman bağımlılıkları nedeniyle bu belirsizliklerden en fazla etkilenen ülkeler arasında yer almaktadır. Çalışma, 2005–2025 döneminde ekonomik politika belirsizliği (EPU) ile uluslararası rezerv yeterliliği arasındaki ilişkiyi analiz etmektedir. Ekonomik Politika Belirsizliğinin merkez bankalarının rezerv biriktirme davranışları üzerindeki etkileri panel veri analizi çerçevesinde incelenmiştir. Guidotti–Greenspan kuralı ve IMF’nin ARA metriğine göre rezerv yeterliliğinin ülkeler arasında önemli farklılıklar gösterdiği görülmüştür. Türkiye ve Güney Afrika’nın rezerv tamponlarının yetersiz olduğu; buna karşılık Hindistan, Endonezya ve Brezilya’nın daha güçlü bir pozisyon sergilediği belirlenmiştir. Yatay kesit bağımlılığını dikkate alan CIPS ve CADF birim kök testleri ile CCEMG ve AMG tahmincileri kullanılmış, Driscoll-Kraay ve Dumitrescu & Hurlin (2012) panel nedensellik yöntemleriyle analiz yapılmıştır. Artan politika belirsizliğinin özellikle dış finansman bağımlılığı yüksek ülkelerde rezerv biriktirme eğilimini güçlendirdiği görülmüştür.

Keywords

• Makroekonomik Belirsizlik
• Para Politikası
• Rezerv Yönetimi
• Finansal İstikrar

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