ISSN: 2225-8329
Open access
This study aimed to examine the impact of macroeconomic variables represented by broad money supply (LOGM2), exports (LOGEX), imports (LOGIM), and the GDP per capita (LOGPCI) on foreign exchange reserves (FER) in Jordan. The study used quarterly data for the period 1993:Q1-2019:Q1.and time series stationary test, cointegration test, and cointegration regression FMOLS, DOLS, methods to test the study hypotheses. The results of the cointegration test showed that there is a long-run relationship between macroeconomic variables and FER. The study also found that macroeconomic variables represented by (LOGM2), (LOGEX) and (LOGPCI) have a positive and statistically significant impact on (FER) in Jordan's in the long run. While the (LOGIM) has a negative and statistically significant impact on (FER) in Jordan in the long run. The study also reached a number of recommendations, the most important of which is the study recommends that decision makers have to increase exports to increase (FER).
1. Achille, A., Cidrec, D., and Duru, U., (2013) Holding Excess Foreign Reserves Versus Infrastructure Finance: What Should Africa Do? Africa Development Bank Group, Working paper, No. 178.
2. Amadeo, K. (2019) Foreign Exchange Reserves and How They Works, https://www.thebalance. com/ foreign-exchange-reserves-3306258.
3. Bilal Mehmood, B., Shahid, A., and Younas, Z. (2013) Interdepencies Between Aviation Demand and Economic Growth in India:Cointegration Equation Estimation, Economic Affairs: 58(4): 337-347.
4. Chin-Hong, P., Mohamad, J., Affendy, A., and Oi-Khim, L. (2011). Determinants of International Reserves in Malaysia. International Journal of Business Research, Vol. 11(4).
5. Chowdhury, M.N., Uddin, M.J., & Islam, M.S. (2014). An Econometric Analysis of the Determinants of Foreign Exchange Reserves in Bangladesh. Journal of World Economic Research. Vol. 3, No. 6, 2014, pp. 72-82.
6. Dickey, D., Fuller, W.A., (1979). Distribution of the estimates for autoregressive time series with unit root. Journal of the American Statistical Association, 74(366), 427–431.
7. Friedman, F. (1953). The Case for Flexible Exchange Rates. In Essays in Positive Economics, 157- 203. Chicago: University of Chicago Press.
8. Gordon, R. J., (2008). Macroeconomics, 11th Edition, Pearson –Addison.
9. Gosselin, A., Parent, W., and Nicholas, R. (2013) An Empirical Analysis of Foreign Exchange reserves in Emerging Asia, Bank of Canada, WP.
10. Hansen, B. E., & Phillips, P.c., (1990): "Estimation and Inference in Models of Cointegration: A Simulation Study," Advances in Econometrics, 8, 225-248.
11. IMF (2003). Are Foreign Reserves in Asia Too High. Chapter II by Edison, H. in World Economic Outlook, September.
12. Johansen, S. (1991). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica, 59(6), 1551-1580.
13. Kashif,M., Sridharan, P., and Thiyagarajan, S. (2017) Impact of economic growth on international reserve holdings in Brazil, Brazilian Journal of Political Economy, Vol., 37. No, 3.
14. Kemal (2002). Optimal Level of Reserves in Developing Economies, with Special Reference to Pakistan, Pakistan Institute of Development Economics, Islamabad, (Public Policy Papers No.1).
15. Khan and Ahmed (2005). The Demand for International Reserves: A Case Study of Pakistan, The Pakistan Development Review, 44:4Part II.
16. Krugman P., Obstfeld M., & Melitz M. (KOM) (2015). International Economics: Theory and Policy, 10th edition, Pearson.
17. Landell-Mills, J.M. (1989). The Demand for International Reserves and Their Opportunity cost. International Monetary Fund Staff Papers, 36(3): 107-32.
18. Manchev, T. (2009). International Foreign Exchange Reserves Celebrating the BNB 10th Anniversary/Bulgarian National Bank, Sofia.
19. Mishkin, F. S. (2006). The Economics of Money, Banking, and Financial Markets, 8th edition, Pearson.
20. Motalvo, J.G. (1995) Comparing cointegrating regression estimators: Some additional Monte Carlo results, Economics Letters 48: 229-234.
21. Nteegah, A., & Okpoi, G. E. (2016). External Trade and its implications on Foreign Exchange Reserves in Nigeria, International Journal of Arts Humanities and Social Sciences (IJAHSS) Volume 1 Issue 5.
22. Osigwe, A. C., Okechukwu, A. I., and Thankgod C. Onoja, T. O. (2015). Modeling the Determinants of Foreign Reserves in Nigeria, Developing Country Studies, Vol. 5, No. 19, Papers No.1).
23. Prabheesh, K P; Malathy, D and Madhumathi, R (2007) Demand for Foreign Exchange Reserves in India: A Cointegration Approach, South Asian Journal of Management, Vol.14, No.2, 36-46.
24. Romero, A. (2018). Comparative Study: Factors that Affect Foreign Currency Reserves in China and India, The Park Place Economist, Vol. 5.
25. Saikkonen, P., (1991). Asymptotically efficient estimation of cointegration regressions, Econometric Theory 7, 1-21.
26. Samih, A. A., s. A., & Aboukhodor, W. (2017) Foreign Exchange Reserves and the Ma
To cite this article: Al-Qudah, A.M., Malkawi, E. (2019). The Impact of Macroeconomic Variables on Foreign Exchange Reserves In Jordan: FMOLS, DOLS, International Journal of Academic Research in Accounting, Finance and Management Sciences 9 (4): 218-227
Copyright: © 2020 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode