The Determinants of International Reserves in the Emerging Countries: a Non-Linear Approach

Anne-Laure Delatte and Julien Fouquau

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we adopt a non linear approach to examine the dynamics of the international reserves holdings by the emerging economies. To do so, we estimate the demand for international reserves with a panel smooth transition model, that loosens two restricting hypotheses, homogeneity and time-stability. We find evidence for the presence of a non linear behavior in the demand for international reserves, a result that is new to the literature. The coefficients are found to change smoothly, as a function of two threshold variables- out of seven candidates tested in total. Our specification accounts for the acceleration of foreign exchange reserves accumulation that the linear specifications fail to explain.

Keywords: International Reserves; Precautionary Demand; Mercantilist; Global Imbalances; Panel Smooth Threshold Regression Models. (search for similar items in EconPapers)
JEL-codes: C23 E58 F31 F41 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The determinants of International Reserves in the Emerging countries: a non linear approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16311

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