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Demand for International Reserves: 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 96 developing nations over the period of 1980-1996, I find considerable differences at different points of the conditional distribution of reserves. The ordinary least squares estimates of elasticities that were found to be insignificant in previous studies become statistically significant at various quantiles of the reserve holding distribution. In particular, I find that the coefficients of interest rate differential and volatility of export receipts are significant and have the signs predicted by the traditional reserve models, but only for those nations that hold the highest amount of reserves. In contrast, the flexibility of the exchange rate does not seem to be an important factor for the nations that are located at the tails of the distribution.

Suggested Citation

  • Sula, Ozan, 2008. "Demand for International Reserves: A Quantile Regression Approach," MPRA Paper 11680, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11680
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    References listed on IDEAS

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    3. Gamboa, Luis Fernando & Rodríguez Acosta, Mauricio & García Suaza, Andrés, 2013. "Differences in motivations and academic achievement," Revista Lecturas de Economía, Universidad de Antioquia, CIE, issue 78, pages 9-44, March.

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    More about this item

    Keywords

    International reserves; Quantile regression; Demand for reserves; Reserve policy;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General

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