What is Driving Reserve Accumulation? A Dynamic Panel Data Approach

Diego Alberto Bastourre (), Jorge Eduardo Carrera and Javier Ignacio Ibarlucia ()

Review of International Economics, 2009, vol. 17, issue 4, pages 861-877

Abstract: Foreign reserve accumulation is a widespread phenomenon of recent years, particularly among emerging economies. Using a panel of 136 countries for the period 1973-2003, we demonstrate the need of using both a dynamic specification of the reserve demand equation and the system GMM estimator. These improvements change the results found by previous studies. Openness, regional imitation, persistence, an inverted U-shaped relationship between reserves and income level, and financial deregulation are the factors driving reserve hoardings. In contrast, reserves yield, and both trade and financial volatility are not statistically significant. Surprisingly, we find that countries with flexible exchange rate regimes have higher ratios of reserves to GDP. This result is robust to alternative exchange rate regime classifications. Copyright © 2009 Blackwell Publishing Ltd.

Date: 2009
References: Add references at CitEc
Citations View citations in EconPapers (9) Track citations by RSS feed

Downloads: (external link)
http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9396.2009.00841.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:reviec:v:17:y:2009:i:4:p:861-877

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is edited by E. Kwan Choi

More articles in Review of International Economics from Wiley Blackwell
Series data maintained by Wiley-Blackwell Digital Licensing ().