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Demand for international reserves in developing nations: A quantile regression approach

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  • Sula, Ozan

Abstract

I estimate the determinants of the demand for international reserves using quantile regressions. Employing a dataset of 108 developing nations over the period of 1980-2007, I find considerable differences at different points of the conditional distribution of reserves. The estimates of elasticities that were found to be insignificant in ordinary least squares regressions become statistically significant at various quantiles of the distribution. Furthermore, majority of the explanatory variables have lower coefficients for the nations that are located on the right tail of the conditional reserve distribution. This finding shows that the level of reserves is as important as the other determinants of the demand for reserves.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 30 (2011)
Issue (Month): 5 (September)
Pages: 764-777

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Handle: RePEc:eee:jimfin:v:30:y:2011:i:5:p:764-777

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Web page: http://www.elsevier.com/locate/inca/30443

Related research

Keywords: International reserves Quantile regression Demand for reserves Reserve policy;

References

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Cited by:
  1. Rangan Gupta & Shawkat Hammoudeh & Won Joong Kim & Beatrice D. Simo-Kengne, 2013. "Forecasting China’s Foreign Exchange Reserves Using Dynamic Model Averaging: The Role of Macroeconomic Fundamentals, Financial Stress and Economic Uncertainty," Working Papers 201338, University of Pretoria, Department of Economics.
  2. Gupta, Rangan & Hammoudeh, Shawkat & Kim, Won Joong & Simo-Kengne, Beatrice D., 2014. "Forecasting China's foreign exchange reserves using dynamic model averaging: The roles of macroeconomic fundamentals, financial stress and economic uncertainty," The North American Journal of Economics and Finance, Elsevier, vol. 28(C), pages 170-189.
  3. Atish R. Ghosh & Jonathan David Ostry & Charalambos G. Tsangarides, 2012. "Shifting Motives," IMF Working Papers 12/34, International Monetary Fund.

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