The authors wish to thank Jérémy Savey for his research assistance. They have also benefited from conversations with Michel Aglietta. They are grateful to André Giroard as well as to two anonymous referees for helpful comments and suggestions. Any remaining errors are the responsibility of the authors.
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What Drove the Massive Hoarding of International Reserves in Emerging Economies? A Time-varying Approach
Article first published online: 16 JAN 2012
DOI: 10.1111/j.1467-9396.2011.01015.x
© 2012 Blackwell Publishing Ltd
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How to Cite
Delatte, A.-L. and Fouquau, J. (2012), What Drove the Massive Hoarding of International Reserves in Emerging Economies? A Time-varying Approach. Review of International Economics, 20: 164–176. doi: 10.1111/j.1467-9396.2011.01015.x
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The authors wish to thank Jérémy Savey for his research assistance. They have also benefited from conversations with Michel Aglietta. They are grateful to André Giroard as well as to two anonymous referees for helpful comments and suggestions. Any remaining errors are the responsibility of the authors.
Publication History
- Issue published online: 16 JAN 2012
- Article first published online: 16 JAN 2012
- Abstract
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Abstract
Existing empirical models fail to explain the surge in the accumulation of foreign exchange reserves by emerging countries during the last decade. This paper provides an estimate of the demand for international reserves on a panel of emerging countries using a time-varying panel smooth transition regression (TV-PSTR) model to relax the assumption of coefficient stability in the relationship. Evidence is dound that the parameters are not constant. In addition, it is observed that the coefficients remained relatively stable until 2000 and then increased gradually and strongly thereafter. The specification provided here accounts for an acceleration that linear specifications fail to explain. Finally, it is found that mercantilist motives are the major driver of this acceleration.