Weltwirtschaftliches Archiv

, Volume 124, Issue 1, pp 161–168 | Cite as

On the exchange-rate elasticity of the demand for international reserves: Some evidence from industrial countries

  • Mohsen Bahmani-Oskooee
  • Farhang Niroomand

Summary and Conclusion

In this paper we tried to investigate the supposition that a change in exchange rate lowers the demand for international reserves. This goal was achieved by incorporating the real effective exchange rate into a standard real reserve demand equation from the literature. The model was estimated for a sample of 13 countries for which the effective exchange rate was available, using pooled quarterly data over the 1973-1985 period. The empirical results revealed that a change in exchange rate indeed reduces the demand for reserves supporting the theoretical arguments of the previous studies.


Exchange Rate Domestic Currency International Reserve Real Effective Exchange Rate International Financial Statistics 
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Copyright information

© Institut für Weltwirtschaft an der Universität Kiel 1988

Authors and Affiliations

  • Mohsen Bahmani-Oskooee
  • Farhang Niroomand

There are no affiliations available

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