Download Foreign Reserve Hoarding and Risk of Greater Foreign Trade

RCFR Working Paper #200801
Foreign Reserve Hoarding and Risk of Greater Foreign Trade
Dependence
Jie Li*
Wukuang Cun†
Ramkishen Rajan‡
01/25/2008
Abstract: The rapid growth of foreign reserves in emerging markets, East-Asia
countries, in particular, has been associated with greater foreign trade dependence,
which in turn, will potentially expose those countries with more external risks. This
effect harms the benefits of reserve hoarding. Therefore, at the early stage, reserve
accumulation may be good for emerging markets in terms of currency crisis
prevention; however, with increased external risks brought by greater foreign trade
dependence, the cost side of reserve accumulation may be dominating. In this regard,
we can derive the optimal reserve holdings. Based on our estimate, the marginal cost
for reserve accumulation in China after Year 2012 will be higher than the marginal
benefits. The optimal reserves may reach 2.5 trillion US dollars.
Key Word: Foreign Reserves, Foreign Trade Dependence, Risk
*
The Central University of Finance and Economics, Beijing, email: [email protected]
The Central University of Finance and Economics, Beijing, email: [email protected]
‡ George Mason University, email: [email protected]
†
1
RCFR Working Paper #200801
1 Introduction
There have been large foreign reserve hoarding among emerging markets after
Asian Financial Crises. Pre-cautionary demand for foreign reserves has been utilized
for explaining such hoarding behavior in various articles. Reserve accumulation is
regarded as the war chest against different risks arising from short-term external debts,
trade deficits, large fiscal debts, and so on.
The benefit side of reserve accumulation has been investigated quite fully with
much less serious research on the cost side. Frenkel and Jovanovic (1981) asserted
that reserves serve as a buffer stock and the optimal stock of reserves depends
positively on the extent of variability of international transactions and negatively on
the market rate of interest. Aizenman and Marion (2004) considered reserve hoarding
as a kind of precautionary demand of emerging markets to smooth consumption
intertemporally. However, since reserves are only accumulated from sovereign
borrowing and costly taxation in their model, the costs of reserves are merely taxation
costs and the utility reduction caused by less current consumption. This assumption
can neither reflect the real process of reserve accumulation nor the increased risk
brought by the larger foreign trade dependence. Olivier Jeanne and Romain Rancière
(2006) regarded reserves as a buffer stock which allows the country to smooth
domestic absorption in response to sudden stops, but yield a lower return than the
interest rate on the country’s long-term debt. To sum up, there are few literatures to
emphasize the cost of reserve hoarding other than opportunity cost. Our paper will
focus on the risks from reserves accumulation itself, the risk of greater foreign trade
2
RCFR Working Paper #200801
dependence in particular.
Reserve accumulation is usually accompanied with increased foreign trade
dependence, which in turn, exposes the economy under higher external risks. It is a
quite common practice among many emerging markets to pursue high growth in
exporting sectors while depress domestic consumption. Since 1996, many emerging
markets have been through a decade-long process with both current account surpluses
and rising foreign trade dependences defined as Export / GDP. Figure 1 shows large
stockpiles of foreign reserves among some major emerging markets, such as China,
Korea, Thailand and Russia, with huge current accounts surpluses. Meanwhile, the
foreign trade dependences of these countries are continuously rising from 21%, 32.4%,
39%, and 40.5% to 37.5%, 42.5%, 73.5% and 45.5% respectively during the period of
1996-2005. The growth rate of reserve accumulation is far greater than GDP growth,
which inevitably increases the foreign trade dependence.
Increased foreign trade dependence is the by-product of globalization which is
believed to be good for global welfare. However, it also makes the emerging markets
more rely on those export destination countries, usually US and EU. The demand
shocks from US or EU would be transferred more easily to the emerging markets
through increased foreign trade dependence. Furthermore, these shocks may well be
channeled to weak domestic banking systems, which in turn, lead to more serious
banking crises. In addition, during surplus years, it is very likely for the emerging
markets to get accused for exchange rate manipulations as well as other trade
disputes.
3
RCFR Working Paper #200801
Therefore, reserve accumulation with greater foreign trade dependence may
expose emerging markets with higher external risks. The net effect of reserves
accumulation will be ambiguous.
This paper is structured as follows. We will lay out the theoretical model in next
section followed by a simpler case study for the model in section 3 and its numerical
solutions in section 4. Then we will fit the model into China’s case in section 5. In
section 6, we will present a two-period model to show that it is not always optimal to
accumulate reserves if foreign trade dependence is taken into account. The final
section concludes our paper.
2 The Model
2.1 Objective Function
NL  P  L  R  CR
(1)
P: Probability for external shocks.
L: Total loss with external shocks, current account shocks in particular1.
R: Reserve holdings.
 : Share of reserve holdings which a government is willing to use to defend.
NL: Net loss.
CR : Opportunity cost of reserves. It can be expressed as CR  cR with the constant
unit cost, c.
We should make it clear that NL is not the real loss of GDP, but a representative
1
We do not argue that the shocks from capital accounts are not important in crisis. Indeed, recent crises are more
like capital account crises. However, what we concern in this paper is foreign trade dependence which is a pure
current account issue. In addition, as we mentioned, the main sources of reserve accumulation for emerging
markets are current account surplus in recent years. Therefore, we include only current account shocks in the
assumptions.
4
RCFR Working Paper #200801
index which indicates expected external risk of an economy.
2.2 More about Probability Function P
We assume that the probability for negative external shocks is associated with
the degree of foreign trade dependence  : P  f ( ) , where  is defined as
Exports/GDP. The greater the foreign trade dependence, the more likely for the
economy to be affected by negative external shocks. With higher foreign trade
dependence, domestic export industries are more likely to be subject to trade disputes,
potential trade barricades, competition and retaliation from foreign counterpart
industries, and troubles of such kind. Therefore, we assume P /   0 .
2.3 More about Loss Function L
L is the loss function which describes the total loss from negative external
shocks. We assume that L is a function of  ， L /   0 .
2.4 More about R and 
We assume that  / R  0 . This assumption is reasonable when the growth rate
of reserve accumulation is much greater than GDP growth while capital accounts
remain relatively stable. This assumption fits the situation in East Asian countries
after the Crises with huge current account surpluses.
2.5 Model solution
The first order condition of (1) determines the optimal R.
NL
L
P 
 (P
L )
  c  0
R

 R
If ( P
(2)
L
P 
L )
   c , the marginal benefit for accumulating one more

 R
5
RCFR Working Paper #200801
unit of reserves is greater than the risks it may bring. If ( P
L
P 
L )
   c , the

 R
marginal cost of reserve accumulation is dominating.
3 A Simpler Case
We assume that the probability function follows the specific form:
P 2
(3)
The probability function is a monotonically increasing convex function of
foreign trade dependence. The greater the foreign trade dependence, the easier for the
economy to get hit by negative external shocks. We also assume the specific
functional form for loss function L is:
L  Y
(4)
where Y is domestic GDP; Y = (Exports/GDP) GDP = Exports, represents exports
of the emerging market, which is also the foreign demand for domestic goods. 
represents the share of demand loss when hit by external shocks.  denotes the units
of domestic output loss when foreign demand reduces by one unit.  is the
Keynesian multiplier.
R is a stock concept, i.e., the accumulated flows of annual reserve additions. Thus, the
reserve level at year t is:
R  R0  R1  R2    Rt
where Ri represents reserve addition at year i.
For simplicity, we assume that Y grows at a constant rate n.
Define r  (exports - imports ) / GDP  (1 
6
imports exports
)
  ,
exports GDP
(5)
RCFR Working Paper #200801
where   (1 
imports
) .  is taken as constant across time2. In China’s case, the
exports
value has been quite stable at 0.13 after the Asian Financial Crises (See Figure 2).
Then, (5) can be rewritten as
t
R  r0Y0  r1Y1  r2Y2    rtYt  Y0 i (1  n)i
(6)
i 0
t
What is left for us to estimate is the value of i (1  n)i . We claim that i is a
i 0
linear function of time. This linear relationship can be directly observed from China’s
data after the Crises3. The precautionary demand for reserves after the Crises has been
picked up quite significantly. In China’s case, the slope of the line a relationship is
approximately 0.025. The export-oriented strategies as well as a series of policies
have been in practice to boost foreign demand. This comes with the increased foreign
trade dependence. The governments are reluctant to change the policies since they do
not want the slower GDP growth during their tenure. Therefore, we predict that the
linear relationship between foreign trade dependence and time will continue at least in
the short and medium run. It seems plausible for us to assume the following:
t    t
(7)
where  and  are constants.
t
For easier computation, we calculate i (1  n)i under continuous case as
i 0
follows:
2
In emerging markets, most of international trades are processing trades. The raw materials are from international
markets, so is the destination of final products. Emerging markets earn processing fee only. Therefore, the ratio of
exports and imports tends to be stable across time.
3 See Figure 3.
7
RCFR Working Paper #200801

t
0
(  t )(1  n) x dx 

 
(1  n)
1 

(1  n)  1 

t (1  n) 
 (8)
ln( 1  n)
ln( 1  n)
ln( 1  n) ln( 1  n)
t
t
t


Replace t with (t   ) /  , and plug the above into (6),
Y0 
Y0  (t   )(1  n)(   ) /  (1  n)(   ) / 
1 
(   ) / 
R
(1  n)
1 



 (9)
ln( 1  n)
ln( 1  n) 

ln( 1  n)
ln( 1  n) 


t
t
t
Plug the expressions of R, P, and L into (1), we have


 Y0 

(t   ) / 
1 
 ln( 1  n) (1  n)


 (10)
NLt  t3 (1  n) (t  ) /  Y0  (  c)

(t   ) / 
(t   ) / 
(1  n)
1 
 Y0  (t   )(1  n)



 ln( 1  n) 

ln( 1  n)
ln( 1  n)  
4 Numerical Solutions:
The optimization problem is:



 Y0 

(t   ) / 
1 

 ln( 1  n) (1  n)


(t   ) / 
3

  (11)
Min t (1  n)
Y0  (  c)
(



)
/

(



)
/

t
t
t
 Y0  (t   )(1  n)
(1  n)
1 








ln( 1  n)
ln( 1  n)   
 ln( 1  n) 

While the analytical solution is difficult to obtain, we try the numerical methods.
The initial parameter values are set as follows:
Y0


n
c




1
0.025
0.2
0.08
0
0.15
1.5
1
14
We set t from 0 to 1 with a tick of 0.01, then we find the minimum NL and optimal
t and R accordingly.
As shown in Figure 2, NL reaches its minimum value (-1.308) at   0.75 and
the corresponding optimal reserve level is 4.75.
 and  are determined by the specific characteristics of a country’s export
industry and government, so we assume     1 to find a general solution. It should be noted that the values
of  and  can only affect the optimal values of NL, R and  , but not the relationships between them and the
4 According to the definitions,
parameters.
8
RCFR Working Paper #200801
According to this result, the NL exhibits the typical U-shape when  increases.
When   0.75 , reserve accumulation will reduce the NL value. But it will increase
the NL value when   0.75 . Therefore, a government should stop its mercantilism
policy as well as the process of reserve accumulation before R and  reach the critical
values. However, the mercantilism policy is inelastic to some degree and hard to be
abolished once put into practice. So even if the values of R and  pass their critical
levels, the government will feel it hard to reverse the reserve accumulation process.
Now, we vary the values of the parameters  , n , c and  , to find out the
relationships between these parameters and critical levels of reserves and foreign
trade dependence.
The policy intensity level 
 represents the intensity of the mercantilism policy. According to the
expression t    t , foreign trade dependence increases more quickly when 
gets larger.
As show in Figure 3, a larger  will decrease the critical levels of reserve and
foreign trade dependence. It implies that an intensive mercantilism policy for reserve
accumulation is more harmful than a moderate one. Even if accumulating reserve via
current account surpluses is sensible for precautionary need, it should be
accomplished in a longer term with a moderate trade policy.
9
RCFR Working Paper #200801
The growth rate of economy n
As shown in Figure 4, when we change the values of n , the critical values of
foreign trade dependence moves in the same direction, leaving the direction of the
critical R uncertain. This result implies that it is not sensible for a government to
adopt a mercantilism policy and accumulate reserves to satisfy its precautionary need
when the economy grows rapidly. There may be not enough time for the economy to
accumulate sufficient reserves when the risk/economy scale is too large.
The efficiency of reserve accumulation 
According to the definition of   (1 
imports
) , we interpret  as the
exports
efficiency of reserve accumulation, that is, the quantity of reserve accumulated per
unit of exports. Given other conditions unchanged, a larger  means more reserves be
accumulated under the same risk or at the same level of foreign trade dependence. As
shown in Figure 5, when we change the values of  , the critical values of foreign
trade dependence and reserve levels will change in the same direction.
In the economy like China or Thailand, where processing-trade accounts for a
large proportion, it may not be sound to adopt mercantilism policy to boost its
reserves.
 is very small in these economies. However, other economies like Korea
with most of export goods carrying their own brands (higher  ) may be more
“suitable” to accumulate reserves via current account surpluses.
It seems that not all economies can benefit from reserve accumulation. Only
those with a relative low GDP growth rate or high accumulation efficiency  can
10
RCFR Working Paper #200801
really get benefits. In addition, the mercantilism policy aimed to accumulate reserves
should not be too intensive. In our view, China may not be suited for such a policy
while Korea may be a better place to adopt mercantilism policy.
5 Calibrations for China
Figure 7 shows that the estimates for China’s  : t  0.4  0.025t after Asian
Financial Crises. See Figure 6 for the  in the past ten years. We take the average of
them about 0.13.
The data for foreign trade dependence, GDP, reserve holdings from 1998 to
2006 is obtained from IFS. We assume the growth rate of foreign trade dependence
from 2007 on as 0.025, GDP grow rate 10 percent,  0.13.
Table 1 shows the estimates of net loss from 1998 to 2022. Figure 8 shows the
net loss when  =2, 1.75 and 1.5. The net loss reaches local minimum at year 2012,
2014 and 2017 respectively. The corresponding reserve holdings are 2.5, 3.4 and 5.2
trillion US dollars.
6 Is it really sensible to hoard so much international reserve?
Large international reserve holdings in a number of Asian emerging markets are
attributed to precautionary need. International reserves can be used to smooth
consumption and distortions intertemporally in the face of volatility of macro
economy (Aizenman et al. 2002). However, in most models developed from this idea,
productivity shock is set to be exogenous, that is, irrelevant with the process of
11
RCFR Working Paper #200801
reserve accumulation. In this paper, we endogenize the productivity shock and relate
it with foreign trade dependence.
Taking the basic setting in Aizenman et al. (2002), we study a two-period,
two-states-of-nature model:
In time period t:
Ct  Yt  Rt , where Yt is constant
(12)
Foreign trade dependence of time t is: t  Rt / Yt
(13)
In time period t+1:
Ct 1  Yt 1  Rt (1  i)
(14)
Yt 1  Yt (1   )
(15)
Where  is a stochastic term that represents productivity shock:
 
 
whith
whith
 
p  0.5
p  0.5
Where  is a function of t which can be expressed as    0   t  .
According to the definition of t , it is obviously that  / Rt  0 . Set  0  0 and
then  0 represents the natural variation of economy.
Objective function:
U  U Ct  
1
U Ct 1 
1 
(16)
Input (12) & (13) & (14) into (16) Ct  Yt  Rt & Ct 1  Yt 1     Rt 1  i 
U  Ut 
1
U t 1
1 
(17)
Where U t  U Yt  Rt & U t 1  U Yt 1     Rt 1  i 
12
RCFR Working Paper #200801
E U   U t 
0.5
Ut 1, H  Ut 1, L 
1 
(18)
Where U t  U Yt  Rt 
Ut 1, H  U Yt 1     Rt 1  i 
Ut 1, L  U Yt 1     Rt 1  i 
Comparison between two cases when Rt  0 :
Case 1: when foreign trade dependence is included
The utility gain associated with acquiring the first unit of international reserves is:
E U 
Rt
Rt  0
 MU t 
0.5
1   Yt  i MUt 1, H  1   Yt  i MUt 1, L 
1 
(19)
The demand for international reserves is positive if obtaining a unit of reserves
increases utility. The demand for international reserves is positive iff：
E U 
Rt
  MU Yt  
Rt  0
0.5  1   Yt  i   MU Yt 1     
0
1    1   Yt  i   MU Yt 1    
（20）
To simplify, suppose 1  i  1   and (20) can be rewritten as:
E U 
Rt
Rt  0
 MU Yt     MU Yt 1     1     MU Yt 1     0
Where  
(21)
0.51   Yt  i 
0.51   Yt  i 
& 1 
1 
1 
Since marginal utility decreases, MU Yt 1     MU Yt   MU Yt 1   
If MU is a linear function, for instance MU (C )    C , inequation (21) cannot be
held since   1 / 2  1   . In this case, even the first unit of international reserve will
bring a negative utility gain.
Only when MU   0 , there may be positive demand for international reserves when
agents have a proper  .
13
RCFR Working Paper #200801
Case 2: when foreign trade dependence is not included
If policy authority does not take “foreign trade dependence” into account when
optimizing E U  , then productivity shock has nothing to do with foreign trade
dependence, that is    0 and    0 . Consequently,
EU 
Rt
Rt  0
 MU t 
0.5
1  i MUt 1, H  1  i MUt 1, L 
1 
(22)
Comparison:
Comparing (19) and (22), we can easily find that:
E U 
Rt

Rt  0
EU 
Rt
(23)
Rt  0
(19) and (22) can be regarded as the extent of inclination to hoard reserves.
Conventionally, policy authority maximizing the expected total utility did not take
“foreign trade dependence” and consequential risk increment into consideration, so
they may find it optimal to hold sizeable international reserves. However, if risk
increment caused by “foreign trade dependence” is included, they may find it not so
optimal to hold so much international reserves.
7 Conclusions
Though reserve can function as a war chest of the macro economy, the process
of reserve accumulation is always accompanied with greater foreign trade dependence
which may expose emerging markets with higher external risks. The net effect of
reserves accumulation will not be that beneficial.
14
RCFR Working Paper #200801
Even if the net effect of reserve accumulation is positive, not all economies can
benefit from it. Only those with a relative low GDP growth rate and high
accumulation efficiency  can really get benefits. In addition, the mercantilism policy
aimed to accumulate reserves should not be too intensive.
15
RCFR Working Paper #200801
References:
[1] Joshua Aizenman and Nancy Marion, 2004, “International Reserve Holdings with Sovereign
Risk and Costly Tax Collection”, The Economic Journal, 114(July), 569-591.
[2] Joshua Aizenman and Nancy Marion, 2002, “The High Demand for International Reserves in
the Far East: What’s going on?”, NBER working paper
[3] Jacob A. Frenkel and Boyan Jovanovic, Jun. 1981, “Optimal International Reserves: A
Stochastic Framework”. The Economic Journal, Vol. 91, pp. 507-514
[4] Jie Li and Ramkishen Rajan, Can High Reserves Offset Weak Fundamentals? A Simple
Model of Pre-cautionary Demand for Reserves, Economia Internazionale, Volume LIX, No.3,
2006
[5] Olivier Jeanne and Romain Rancière, 2006, “The Optimal Level of International Reserves for
Emerging Market Countries: Formulas and Applications”, IMF working paper.
16
RCFR Working Paper #200801
Figure 1
China
Korea
35
140
30
120
25
100
20
80
15
60
40
10
20
5
0
0
40
10
-10
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
20
10
-30
0
Current Account Surplurs
Foreign Trade Dependence
90
50
70
80
45
70
40
60
35
50
30
40
25
30
20
20
15
10
10
60
5
50
0
40
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
30
-10
20
-15
10
-20
0
Current Account Surplurs
U.S. dollar billions
10
Foreign Trade Dependence
percent
80
0
-10
Foreign Trade Dependence
5
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Current Account Surplurs
1
Foreign Trade Dependence
0
Foreign Trade Dependence
percent
Russia
15
Current Account Surplurs
U.S. dollar billions
30
0
Foreign Trade Dependence
20
Current Account Surplurs
40
20
Thailand
-5
50
30
-20
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Current Account Surplurs
60
Foreign Trade Dependence
percent
160
Current Account Surplurs
U.S. dollar billions
40
Foreign Trade Dependence
percent
Current Account Surplurs
U.S. dollar billions
50
180
-0.5
0
-1
-1.5
YITA
1
1
0.96
0.92
0.88
0.84
0.8
0.76
0.72
0.68
0.64
0.6
0.56
0.52
0.48
0.44
0.4
0.36
0.32
0.28
0.24
0.2
0.16
0.12
0.08
0.04
Net Loss
RCFR Working Paper #200801
Figure 2
NL vs YITA
2.5
2
1.5
1
0.5
系列1
0
RCFR Working Paper #200801
Figure 3
ALPHA
12
10
8
6
4
2
0
0
-1
-2
-3
Minimum NL
Optimal Reserve
ALPHA
-4
0.02
0.025
0.03
0.035
0.04
0.045
0.05
ALPHA
Optimal Reserve
MINNL
*
R
NL

0.81
0.75
0.7
0.65
0.6
0.56
0.53
11.33
4.75
2.55
1.52
0.961
0.66
0.49
-3
-1.308
-0.695
-0.412
-0.261
-0.173
-0.118
0.02
0.025
0.03
0.035
0.04
0.045
0.05
Figure 4
GDP Growth Rate
4.95
4.9
4.85
4.8
4.75
4.7
4.65
4.6
-1.2
-1.25
-1.3
-1.35
Minimum NL
Optimal Reserve
GDP growth rate
-1.4
0.02
0.025
0.03
0.035
0.04
0.045
GDP Growth Rate
Optimal Reserve
Minimum NL
1
*
R
NL
n
0.86
0.82
0.78
0.75
0.73
0.7
4.84
4.86
4.75
4.75
4.92
4.73
-1.376
-1.351
-1.33
-1.308
-1.289
-1.271
0.05
0.06
0.07
0.08
0.09
0.1
RCFR Working Paper #200801
Figure 5
SITA
10
0
8
-0.5
6
-1
4
-1.5
2
-2
0
Minimum NL
Optimal Reserve
SITA
-2.5
0.02
0.025
0.03
0.035
0.04
0.045
SITA
Optimal Reserve
Minimum NL
2
*
R
NL

0.64
0.68
0.72
0.75
0.79
0.82
2.1
2.84
3.79
4.75
6.21
7.65
-0.575
-0.773
-1.015
-1.308
-1.66
-2.074
0.12
0.13
0.14
0.15
0.16
0.17
RCFR Working Paper #200801
Figure 6
China
(Export-Import)/Export
0.4
0.3
0.2
0.1
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
-0.1
-0.2
-0.3
-0.4
(Export-Import)/Export
Figure 7
China
Foreign Trade Dependence
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
Export/GDP
1
2001
2002
2003
2004
2005
2006
RCFR Working Paper #200801
Figure 8
China
Net Loss Index
3
2.5
1.5
1
0.5
-1
-1.5
-2
YEAR
When lamda=2.00
When lamda=1.50
2
When lamda=1.75
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-0.5
1999
0
1998
Net Loss Index
2
RCFR Working Paper #200801
Table 1
YEAR

GDP
Reserve
(USD Trillion)
Exp/GDP (USD Trillion)
1998
0.197
1.096
0.145
1999
0.197
1.165
0.155
2000
0.225
1.289
0.166
2001
0.218
1.424
0.212
2002
0.243
1.563
0.286
2003
0.286
1.764
0.403
2004
0.328
2.076
0.610
2005
0.364
2.388
0.819
2006
0.403
2.739
1.066
2007
0.428
3.012
1.234
2008
0.453
3.314
1.429
2009
0.478
3.645
1.655
2010
0.503
4.010
1.917
2011
0.528
4.411
2.220
2012
0.553
4.852
2.569
2013
0.578
5.337
2.969
2014
0.603
5.870
3.430
2015
0.628
6.457
3.957
2016
0.653
7.103
4.559
2017
0.678
7.814
5.248
2018
0.703
8.595
6.033
2019
0.728
9.454
6.927
2020
0.753
10.400
7.945
2021
0.778
11.440
9.102
2022
0.803
12.584
10.415
*Net Loss values after 2006 are predicted values.
3
Net loss
(   1.5 )
Net loss
(   1.75 )
Net loss
(  2)
-0.132
-0.141
-0.143
-0.190
-0.253
-0.342
-0.500
-0.646
-0.798
-0.880
-0.968
-1.059
-1.153
-1.247
-1.339
-1.425
-1.501
-1.560
-1.596
-1.599
-1.558
-1.461
-1.291
-1.028
-0.650
-0.130
-0.139
-0.140
-0.186
-0.247
-0.331
-0.482
-0.617
-0.753
-0.821
-0.891
-0.960
-1.026
-1.085
-1.135
-1.168
-1.180
-1.161
-1.102
-0.990
-0.812
-0.550
-0.182
0.318
0.978
-0.128
-0.137
-0.136
-0.182
-0.242
-0.321
-0.463
-0.588
-0.708
-0.762
-0.814
-0.860
-0.898
-0.923
-0.930
-0.911
-0.858
-0.761
-0.608
-0.382
-0.066
0.361
0.928
1.663
2.605