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Foreign Reserves and Economic Growth: Granger Causality Analysis with Panel Data

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  • Mei-yin Lin

    (Department of Economics, Shih Hsin University)

Abstract

This paper will investigate the Granger causality between foreign reserves and economic growth in twenty largest reserves-holding countries ranging from 1980 to 2008. The method of first-differencing each variable is used to estimate the panel data VAR equations for Granger causality test. The results show the foreign reserves unilaterally Granger cause economic growth only in the emerging countries. In the advanced countries, there is no Granger causal relation between foreign reserves and economic growth.

Suggested Citation

  • Mei-yin Lin, 2011. "Foreign Reserves and Economic Growth: Granger Causality Analysis with Panel Data," Economics Bulletin, AccessEcon, vol. 31(2), pages 1563-1575.
    • Handle: RePEc:ebl:ecbull:eb-11-00058
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    References listed on IDEAS

    as
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    8. repec:bla:econom:v:50:y:1983:i:199:p:269-80 is not listed on IDEAS
    9. Polterovich, Victor & Popov, Vladimir, 2003. "Accumulation of Foreign Exchange Reserves and Long Term Growth," MPRA Paper 20069, University Library of Munich, Germany.
    10. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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    Cited by:

    1. Feldkircher, Martin, 2014. "The determinants of vulnerability to the global financial crisis 2008 to 2009: Credit growth and other sources of risk," Journal of International Money and Finance, Elsevier, vol. 43(C), pages 19-49.
    2. repec:zbw:bofitp:2012_026 is not listed on IDEAS
    3. He Li & Zhixiang Yu & Chuanjie Zhang & Zhuang Zhang, 2017. "Determination of China’s foreign exchange intervention: evidence from the Yuan/Dollar market," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 34(1), pages 62-81, March.
    4. Feldkircher, Martin, 2014. "The determinants of vulnerability to the global financial crisis 2008 to 2009: Credit growth and other sources of risk," Journal of International Money and Finance, Elsevier, vol. 43(C), pages 19-49.

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    More about this item

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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