The Demand for International Reserves in Barbados

Author(s): Craigwell, Roland; Greenidge, Kevin; Downes, Darrin (2006)

Created 01 Jan, 2006
Categories Working Papers Roland Craigwell Special Collection
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This article empirically investigates the factors influencing the demand for the net international reserves in Barbados over the past three decades, using the dynamic OLS (DOLS) method developed by Saikkonen (1991) and generalised by Stock and Watson (1993). This estimation technique is appropriate for small samples and allows for the explicit account of endogenity. The paper builds on previous studies for developed and developing countries in the sense that other explanatory variables, such as the level of foreign debt service payments and an index of capital account liberalisation, are included in the empirical reserve demand function to reflect the current economic environment.

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