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International Reserves, Current Account Imbalance And External Debt: Evidence From Malaysia

Author

Listed:
  • Eliza Nor
  • M. Azali
  • Siong-Hook Law

Abstract

The purpose of the study is to analyze both the short-run and long-run demand for international reserves in Malaysia for the period 1970-2004. The autoregressive distributed lag (ARDL) bounds testing approach proposed by Pesaran, Shin, and Smith (2001) is used to test for the existence of cointegration relationship between the demand for international reserves and its determinants. The empirical results suggest that current account balance and short-term external debt significantly affect the demand for international reserves both in the long run and short run.

Suggested Citation

  • Eliza Nor & M. Azali & Siong-Hook Law, 2008. "International Reserves, Current Account Imbalance And External Debt: Evidence From Malaysia," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 16(1), pages 47-76, December.
  • Handle: RePEc:ije:journl:v:16:y:2008:i:1:p:47-76
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    File URL: http://www.iium.edu.my/enmjournal/161art2.pdf
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    Cited by:

    1. Nebiye, Sinem & Yamak, Nebiye, 2014. "Demand for International Reserves in Turkey," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(52), pages 63-76, June.

    More about this item

    Keywords

    International reserves; Current account imbalance; Short-term external debt; Malaysia;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F39 - International Economics - - International Finance - - - Other

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