The demand for international reserves: evidence from four Caricom economies

Author(s): Coppin, Addington; Craigwell, Roland C (1988)

Created 26 Jul, 1988
Categories Working Papers
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This paper seeks to estimate the demand for international reserves for four Caribbean economies. Based on current theoretical frameworks, a hypothesis on transactions and precautionary motives for holding these reserves is made. The results suggest a transaction motive for holding foreign reserves in Barbados, Jamaica and Trinidad and Tobago. The results for Guyana yielded a perverse sign on the transactions variable. The transactions elasticities suggest dis-economies of scale in holding money in Barbados, and economies of scale in Jamaica and Trinidad and Tobago. The precautionary motive for holding reserves showed up as significant only in the equations for Jamaica. (Previous title: Collection of unpublished research papers)

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