ABSTRACT
This study provides an econometric analysis of the reserve-asset behavior of the outer countries over a critical time span of the international monetary system, between 1958, the year the system entered its ‘crisis zone’ (that stage in which the probability of collapse of the system became apparent to the participants), and 1967, when agreement was reached on the SDR reform of the system. It tests for changing reactions of these countries with respect to the confidence problem as the system moved further into the crisis zone. Such an altered behavior pattern will be denoted as ‘restraint’ if it involves the holding of more dollars and fewer other reserve assets (primarily gold) than a country otherwise would do. This restraint has been postulated in theoretical studies by Officer and Willett [14, 15], but thus far their work has not been subjected to empirical testing.
