Paper will deal with theoretical and empirical dimension of the determinants of level of the FX reserves. Initially, the empirical analysis will include the various relative measures of the foreign exchange reserves (FXR). We will calculate the FXR over selected variables (population, import, M2, GDP and currency in circulation, etc.). We will also construct the overall rank (list) for the main countries in the world, which is based on these relative measures. The econometric analysis will be made by means of the panel data analysis (fixed effects, possibly Arellano and Bond (1991) procedure based on GMM) and cointegration analysis. The dependent variable will be the FXR per capita denominated in USD. The set of explanatory variables will for example consist of the foreign direct investment per capita, openness per capita (the sum of export and import), domestic credit per capita, GDP per capita, costs of holding FX reserves and the dummy variable for the exchange rate regime. The estimations will be made for four periods: (i) early nineties (1990-1994), (ii) late nineties (1995-1999), the new millennium (2000-2007) and financial crisis (2007-2010).
Data/Methods:
IFS and Datastream / panel data, cointegration
Results/Expected Results/Conclusion:
The outcome of research paper can (i) shed more light to the discussion about determinants of level and structure of the FX reserves, (ii) evaluate the issue of excessive exchange reserves – a new phenomenon reflecting major changes in the world economy (including gBack to Sessionradually diminishing effects of financial crisis) and its financial markets.