Effects of Gold Reserve Policy of Major Central Banks on Gold Prices Changes

Oguzhan Ozcelebi (ogozc@istanbul.edu.tr) and Metin Duyar (metinduyar@gmail.com)
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Oguzhan Ozcelebi: Istanbul University
Metin Duyar: Nevsehir Hac? Bektas Veli University

No 4206516, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: Central banks which are responsible for minting and monetary policy implementations are the institutions carry out sensitive policies for the healthy functioning of the economy. Policies implemented by central banks and its existing institutional structures cannot be dissociated from the political and social development of the country they live in, and the whole of economic policy. In recent years, with increasing pace of globalization, the mobility of international financial markets increased and this effect has extended the decisions of the central bank from national markets to international markets. In this study, we studied the possible impacts of changes in the share of gold in central banks? reserves on gold prices proving empirical evidence from the USA, the Euro area, China and Russia. According to Causality and Forecast Error Variance Decomposition analysis deriving from VEC model, reserve polices of central banks of these countries has considerable effects on variations in gold price in the long-term. Empirical findings reveal the importance of the size of balance sheet of central banks, while it is also stressed that growth potential of economies and investment opportunities are crucial issues in terms storing reserves in terms of gold.

Keywords: Dynamics of Gold Prices; Central Banks; the USA; the Euro area; China and Russia (search for similar items in EconPapers)
JEL-codes: E44 E58 F30 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2016-10
New Economics Papers: this item is included in nep-cba, nep-cis, nep-mac and nep-mon
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Published in Proceedings of the Proceedings of the 6th Economic & Finance Conference, OECD Headquarters, Paris, Oct 2016, pages 297-309

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:4206516

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