Gold Price as Another Determinant of Demand for International Reserves

Abstract

Various authors have tried to verify the importance of different variables in the reserve demand equation. This article introduces a new independent variable, the gold price, into the reserve demand function. By pooling cross‐section and time‐series (quarterly) data for 19 industrial countries over the 1973–1981 period, a reserve demand equation is estimated. It is concluded that the price of gold exerts a significantly negative effect on the demand for international liquidity.

Citation

Bahmani‐Oskooee, M. (1984), "Gold Price as Another Determinant of Demand for International Reserves", Journal of Economic Studies, Vol. 11 No. 4, pp. 23-32. https://doi.org/10.1108/eb002587