Impact of economic growth on international reserve holdings in Brazil

Vol. 37 No. 3 (2017)

Jul-Sep / 2017
Published February 26, 2020
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PDF-English

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Kashif, Mohammad, P. Sridharan, and S. Thiyagarajan. 2017. “Impact of Economic Growth on International Reserve Holdings in Brazil”. Brazilian Journal of Political Economy 37 (3):605-14. https://doi.org/10.1590/0101-31572017v37n03a08.
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Impact of economic growth on international reserve holdings in Brazil

Mohammad Kashif
Research Scholar, Department of International Business, School of Management, Pondicherry Central University, India.
P. Sridharan
Associate Professor & Head, Department of International Business, School of Management, Pondicherry Central University, India.
S. Thiyagarajan
Assistant Professor, Department of International Business, School of Management, Pondicherry Central University, India.
Brazilian Journal of Political Economy, Vol. 37 No. 3 (2017), Jul-Sep / 2017, Pages 605-614

Abstract

This study investigated the impact of economic growth on Brazilian international reserves holdings in the context of Error Correction Mechanism using data over the 1980-2014 period. The results reveal that economic growth is highly significant. From the estimation of our model, we argue that economic growth and international reserves have positive long run relationship. The estimates of error correction model are valid because error correction term is negative and statistically significant. Besides, our model suggested that economic growth has short run relationship too. The speed of adjustment is more than forty percent which indicated that error correction term corrects previous year disequilibrium at the rate of 40.4%.

JEL Classification: F41; F43; F62.


Keywords: Brazil economic growth error correction model international reserves.