Untitled

Lane, Philip R.; Burke, Dominic

doi:10.1023/a:1017939118781

Cited by 63 publications

(12 citation statements)

References 12 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This result is consistent with the findings by Lane and Burke (2001) who find an inverse relationship between international reserve holdings and short term external debt for emerging economies.…”

Section: Discussion Of Findingssupporting

confidence: 93%

See 1 more Smart Citation

International Reserves, Current Account Imbalance and Short Term External Debt: A Comparative Study

Nor¹,

Azali²,

Law³

2011

IJEF

View full text Add to dashboard Cite

This paper examines the behavior of international reserve holdings in East Asia, ASEAN5, and non-ASEAN countries during the period 1970-2005 using panel cointegration and FMOLS. The panel cointegration tests find the existence of long run relationship between international reserve holdings and its determinants. The panel group FMOLS results indicate that current account balance is statistically significant and exert a positive impact on international reserve holdings in East Asia, ASEAN5 and non-ASEAN countries while short term external debt shows a positive and negative impact on international reserve holdings in ASEAN5 and non-ASEAN countries, respectively. Keywords:International reserves, Current account imbalance, Short term external debt, East Asia IntroductionEast Asian economies have been holding high level of international reserves since the 1997 East Asian financial crisis. Among the East Asian countries, China, Japan, Hong Kong, Korea, Malaysia, Taiwan, and Singapore are ranked among the top reserve holders. Even though reserves can provide liquidity and returns, there are several implications associated with high reserve holding. High reserve holdings in these countries in recent years reflect the prudence in their economic policies, high growth prospect, and surplus in their trade accounts. At the same time, high reserves are associated with the global external payments imbalances (World Bank, 2005).The present paper analyzes the behavior of international reserve holdings in three groups of East Asian countries namely East Asia (Indonesia, China, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand), ASEAN5 (Indonesia, Malaysia, the Philippines, Singapore, and Thailand), and non-ASEAN countries (China, Japan, Korea, and Taiwan) using panel cointegration and Fully Modified Ordinary Least Squares (FMOLS). The study includes Indonesia, the Philippines, and Thailand because, like the rest of the countries, these ASEAN countries have also increased their international reserve holdings after the crisis.Previous studies on international reserve holdings using pooled cross section and time series data have analyzed the behavior of international reserve holdings using data from developed countries (for instance, Bahmani-Oskooee, 1984Edwards, 1984b;Flood & Marion, 2002;Bahmani-Oskooee & Brown, 2004) and developing countries (for instance, Iyoha, 1976;Edwards, 1984aEdwards, , 1985Aizenman & Marion, 2003;Mendoza, 2004; Zhou, 2005; Ra, 2006). Studies that compare the behavior of international reserve holdings for both developed and developing countries include Frenkel (1980), Bahmani-Oskooee (1987), Lane and Burke (2001) Even though studies by Gosselin and Parent (2005) and Cheung and Xing (2007) have analyzed the behavior of international reserve holdings in the Asian context, comparison between different groups of countries have not been made. Therefore, the study intends to fill up this gap in the literature. The present study also differs from previous studies in a way that it all...

show abstract

Section: Discussion Of Findingssupporting

confidence: 93%

“…Studies that compare the behavior of international reserve holdings for both developed and developing countries include Frenkel (1980), Bahmani-Oskooee (1987), Lane and Burke (2001), Choi and Beak…”

Section: Introductionmentioning

confidence: 99%

International Reserves, Current Account Imbalance and Short Term External Debt: A Comparative Study

Nor¹,

Azali²,

Law³

2011

IJEF

View full text Add to dashboard Cite

show abstract

“…Higher capital account openness is usually associated with greater vulnerability to changes in gross capital flows (Roveda & Rosselli, 2003), hence may be associated with larger gold holdings as a hedge. Capital account openness and trade openness have been used in several prior studies on the determinants of central bank reserve holdings (Lane & Burke, 2001;Marc-Andre & Parent, 2005;Obstfeld, Shambaugh, & Taylor, 2009). GDP per capita is used as a control for the relative capacity of countries to accumulate gold reserves and is a measure of economic size which is considered as one of the determinants of reserve holdings (Marc-Andre & Parent, 2005).…”

Section: Methodsmentioning

confidence: 99%

“…GDP growth is used as a control for the propensity to accumulate gold reserves by countries that engage in competitive hoarding of reserves, a phenomenon that started in the early 1990s as an aftermath of both export promotion and credit subsidization motives (Aizenman & Lee, 2008). In order to control for the depth of domestic financial markets which can contribute to reserve holdings (Lane & Burke, 2001), we have used the ratio of private credit to GDP as a proxy for the level of financial development (Svirydzenka, 2016). In order to capture country-specific risks, we use the Institutional Investors Rating (IIR).…”

Section: Methodsmentioning

confidence: 99%

“…However, the sign and significance of the effect of VIX on gold reserves is consistent with or without the gold price control.On average, holding all other variables constant, a unit change in the global risk measure increases gold reserves to overall reserves by 6.7 basis points. An implication of this result is that a one standard deviation increase in the global risk measure (equivalent to 6 units increase in VIX index) increases the share of gold reserves in overall reserves by 4.2 percent relative to the 2 Some studies regarding international reserves have found a positive relationship between trade openness and reserves excluding gold(Lane & Burke, 2001).…”

mentioning

confidence: 99%

See 1 more Smart Citation

Global risk and demand for gold by central banks

Gopalakrishnan

Mohapatra

2017

Applied Economics Letters

View full text Add to dashboard Cite

This paper examines the influence of global risk on the holding of gold by central banks based on annual data for 100 countries during 1990-2015. We use a dynamic panel generalized method of moments (GMM) model to estimate this effect, controlling for a variety of domestic factors. Consistent with portfolio diversification and perception of gold as a safe asset, we find that the gold holdings of central banks increase in response to higher global risk. This effect is larger for high-income countries than for developing countries. Moreover, greater capital account openness is associated with a stronger response of central banks' gold holding to global risk, while a higher ratio of overall reserves to imports is associated with a weaker response. We also find evidence that the sensitivity depends on whether the currency regime followed is fixed or floating, with higher responsiveness in the case of fixed rate regimes. The baseline results are robust to alternate estimation methods, exclusion of crisis years, active and passive management of gold reserves and additional controls. These findings suggest that central banks adjust their gold holdings in response to changes in global risk conditions, with the magnitude of response depending on reserve management capacity and country-specific vulnerabilities.

show abstract

Do dynamics and heterogeneity in panel data models matter?

Steiner

2010

Empir Econ

View full text Add to dashboard Cite

show abstract

Untitled

Cited by 63 publications

References 12 publications

International Reserves, Current Account Imbalance and Short Term External Debt: A Comparative Study

International Reserves, Current Account Imbalance and Short Term External Debt: A Comparative Study

Global risk and demand for gold by central banks

Do dynamics and heterogeneity in panel data models matter?

Contact Info

Product

Resources

About