Dynamic Reserve Adjustment Under Varying Balance of Payments Positions |
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| Authors: | Margaret M. Malixi Mohsen Bahmani-Oskooee |
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| Affiliation: | 1. California State University;2. The University of Wisconsin-Milwaukee |
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| Abstract: | Most studies on dynamic reserve demand assume that countries respond symmetrically to positive and negative deviations of actual From desired reserves. The present study demonstrates that for a sample of developed countries (DCs), balance of payments deficits induce a faster response (higher speed of adjustment) than do surpluses. The opposite is true for the sample of developing countries (LDCs) tested. However, the size of the gap rather than whether excess demand is positive or negative seems to be the determining factor of adjustment speeds in the case of the LDC sample. [F 31] |
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