Work detail

Gold in Central Bank Reserves and Price Stability

Author: Mgr. Olena Melnychuk
Year: 2019 - winter
Leaders: prof. PhDr. Tomáš Havránek Ph.D.
Work type: Masters
Language: English
Pages: 74
Awards and prizes:
Abstract: There is a traditional view that central banks should hold enough gold in their reserves
to be considered financially secure and keep low inflation. However, after the fall of the
Bretton-Woods system, many central banks have been decreasing its gold reserves
by converting gold into other assets and still they do not experience high inflation. This
thesis aims to answer the question if gold reserves of central banks indeed positively
affect price stability. We use the panel data for 110 countries for the period from 2000
to 2016. We find that there is a significant negative effect of central banks’ gold
reserves on inflation but only if we control the proxy variables for the financial strength
of central banks. Furthermore, the significance holds only for the inflation-targeting
countries, there are no significant effects for the whole data sample




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