—This study aims to investigate the long run relationship of international reserves holding in Egypt using the buffer stock model presented by Frenkel and Jovanovic (1981). The study employed quarterly data from 1990Q1 to 2012Q4. A robust time series technique autoregressive distributed lag (ARDL) was used which is applicable irrespective of whether the regressors are purely I (0) or purely I (1). The evidence derived from the ARDL approach support the fact that the scale variables and the volatility variable have significant effects on the reserve demand. The evidence also demonstratesthat both exchange rate flexibility and opportunity cost does not have any significant impact on the reserve demandin Egypt.
—International reserve holdings, Egyptian economy, autoregressive distributed lag (ARDL).
Osama M. Badr is with the Faculty of Commerce, Tanta University, Egypt, College of Business, Umm Al-Qura University, KSA (e-mail: email@example.com).
Ahmed F. El-khadrawi is with the Faculty of Commerce, Damietta University, Egypt, Faculty of Islamic Economic and Finance, Umm Al- Qura University, KSA (e-mail: firstname.lastname@example.org).
Cite: Osama M. Badr and Ahmed F. El-khadrawi, "Reserve Holdings and Macroeconomic Variables: An Empirical Dynamic Analysis in Egyptian Economy," International Journal of Trade, Economics and Finance vol.6, no.2, pp. 90-95, 2015.