Exchange rate regime and demand for reserves: Evidence from Kenya, Mexico and Philippines

Choudhry, Taufiq and Hasan, Mohammad S (2008) Exchange rate regime and demand for reserves: Evidence from Kenya, Mexico and Philippines. Open Economies Review , 19 (2). pp. 167-181. ISSN 0923-7992 . (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1007/s11079-007-9023-y

Abstract

This paper empirically investigates the demand for international reserves (and foreign exchange reserves) during fixed and floating exchange rates periods in three developing countries: Kenya, Mexico and Philippines. Based on theoretical models, three factors are identified as important for the demand of international reserves and foreign reserves: average propensity to import, volume of imports and variability of reserves. The paper employs the cointegration methodology and error correction method to investigate the relationships. Cointegration tests results indicate a reliable long-run stationary relationship between the international reserves (and foreign exchange reserves) and the stated explanatory variables across countries and sub-periods of fixed and clean float. The error correction results indicate causality from the explanatory variables to the reserves during both the short and long run. This is true during both the fixed and the floating periods

Item Type: Article
Uncontrolled keywords: international reserves; volatility; cointegration; exchange rate regimes
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Rebecca Stevenson
Date Deposited: 06 Jan 2010 11:29
Last Modified: 29 Jan 2010 14:10
Resource URI: http://kar.kent.ac.uk/id/eprint/23566 (The current URI for this page, for reference purposes)
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