Title: Demand for international reserves: evidence from East Asia

Authors: Eliza Nor, M. Azali, Siong Hook Law

Addresses: School of Management, University of Science Malaysia, 11800 USM, Penang, Malaysia. ' Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM, Serdang, Selangor, Malaysia. ' Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 UPM, Serdang, Selangor, Malaysia

Abstract: This paper examines the demand for international reserves in nine East Asian economies during the period 1970-2005 using panel cointegration and Fully Modified Ordinary Least Squares (FMOLS). The panel cointegration tests find the existence of a long-run relationship between the demand for international reserves and its determinants. The panel group FMOLS results indicate that current account balance and total external debt are statistically significant and exert a positive and negative impact, respectively, on the demand for international reserves in East Asia.

Keywords: international finance; international reserves; current account; external debt; panel cointegration; fully modified least squares; East Asia.

DOI: 10.1504/AJFA.2009.026485

American Journal of Finance and Accounting, 2009 Vol.1 No.3, pp.297 - 311

Published online: 17 Jun 2009 *

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