Does the accumulation of international reserves spur inflation? A reappraisal

According to the quantity theory of money, the accumulation of reserves might result in inflationary pressures if the resulting monetary expansion is not fully sterilized and exceeds the growth of money demand. Our estimation results show that the degree of sterilization has varied considerably over time. The empirical analysis of monetary and non-monetary determinants of inflation provides evidence that the accumulation of reserves raises the inflation rate, both on the global and the individual-country level.