How stable is the demand for international reserves?

摘要

Previous research that has tested the stability of the reserve demand function uses panel data, without incorporating any adjustment process into the testing procedure when providing evidence of instability in reserve demand. In this article, we use time-series data, as well as a bounds testing approach to error-correction modelling that incorporates the adjustment process, to show that reserve demand function is stable in 20 of the 22 Organisation for Economic Co-operation and Development (OECD) countries in our study.