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We examine whether firms' tax uncertainty affect their trade credit and inventory investment policies. Using a measure of tax uncertainty based on an accounting reserve for contingent tax liability, we find that tax uncertainty is negatively associated with trade credit use and inventory investment. In terms of economic significance, the effect of tax uncertainty on trade credit use is comparable to those of the firm's cash flow and leverage. Overall, our findings highlight a new channel through which tax planning policies affect corporate decisions and show that the firm's tax planning policies are important determinants of its trade credit use and inventory investment. Our results are robust to different empirical specifications and tests. [ABSTRACT FROM AUTHOR]

This study examines the effect of exchange rate regimes on foreign direct investment (FDI) flow for West African Monetary Zone (WAMZ). The Arellano Panel Correction for Serial Correlation and Heteroskedaticity option of the Within Estimator for fixed-effect panel data model as well as the Dynamic Panel Data Instrumental Variable Approach by Anderson and Hsiao [(1981). Estimation of dynamic models with error components. Journal of the American Statistical Association, 76, 598–606] for the countries selected based on the data availability for the period 1980–2016 were used. The fixed exchange rate regime was found to hamper FDI flow in the zone, while intermediate policy had a significantly positive effect in facilitating FDI flow during periods of declining foreign reserves and narrowing current account balance in WAMZ. This implies that the transmission of the effect of exchange rate regimes on FDI inflows depends on the positions of the foreign reserves and current account balance in the zone. The study therefore recommends the need for monetary authorities to be cautious in managing their exchange rates especially in periods of depleting foreign reserves and narrowing current account so as not to deter the much needed FDI inflow. [ABSTRACT FROM AUTHOR]

The complex pattern of gold production in Canada, which differs from the classic Hubbert´s curve, is modeled, and a short-term forecast is made, via the Fundamental Equation of Mineral Production (FEMP). For intervals of time with a variable production to reserves ratio, a discrete piecewise version of the equation updates the reserves and the Production to Reserves Ratio (PRR) by units of time. These piecewise linear portions of the PRR correspond to sub-cycles of rising and declining production embedded in the overall history of production. This version of the FEMP allows modelling of any pattern of mineral production at a universal range of scales. The Hubbert´s linearization indicates the official account of reserves underestimates the real amount of gold resources in Canada. The equivalence between the Hubbert's formula and the FEMP is introduced. The Hubbert curve is shown as a case study of the Fundamental Equation, featured as the product of a quadratic function of the cumulative production and a rational function of the PRR with time. The forecast for Canada's current gold production illustrates the metal output is about to peak with an all-time record high in the near future, unless new findings or influential global economic factors are introduced (i.e., a sharp and sustained growth of gold demand from regional markets), allowing an increase of the slope of the linear function featured by the PRR of the FEMP-based model. [ABSTRACT FROM AUTHOR]

This article examines steps taken at one academic library to address issues encountered when attempting to create a foundation of copyright knowledge to assist staff in reserves and interlibrary loan. It reviews the development of a copyright policy for the library that specifically addressed interlibrary loan and reserves activities. It also addresses how conducting staff instruction, developing process documentation, and having regular training meetings, enhanced each department's ability to incorporate the new policy into daily workflows. Finally, it points out new issues encountered when attempting to simplify how copyright and licensed materials are handled. [ABSTRACT FROM AUTHOR]

This article analyses the effects of involuntary excess reserves (IER) on bankers’ remuneration and the penalty associated with bank risk-taking if discovered. The study finds that IER help conceal tail risks, improves bankers’ performance and remuneration. However, the risks once discovered result in heavy penalties on bankers’ remuneration. The study extends the agency theory to the context where banks hold large IER. [ABSTRACT FROM PUBLISHER]

As librarians are increasingly identified as rights experts on campus, it is essential that they understand rights issues and how best to communicate them to a multitude of users. While scholarly literature contains many examples of librarians working with faculty on copyright issues regarding course materials, reserves, e-reserves, and intellectual property, there is far less documentation of the need for students, especially undergraduates, to understand their rights as creators and consumers of information. This article reviews relevant literature on librarian copyright skills, the need for copyright instruction, and current case studies and examples of copyright instruction for undergraduates. [ABSTRACT FROM AUTHOR]

This study employs pure-sign-restriction approach analysing the macroeconomic impacts of foreign reserve accumulation and discusses the foreign exchange sterilization behaviour of the People’s Bank of China (PBoC). Sign restriction analysis shows that the effects of reserve accumulation shock are initially ambiguous on all variables, but later a positive influence only on base money can be observed. With regard to sterilization intervention, the effect is significant even though it degrades gradually over time. In China, the monetary authority actively undertakes sterilization intervention in order to remove the influence of passive release of base money caused by foreign reserve accumulation. [ABSTRACT FROM PUBLISHER]

One of the traditional benchmarks in international macroeconomics is that a country should maintain reserves that can cover at least 12 weeks of imports. The notion of reserve adequacy, however, is not static and is intimately associated with the occurrence of financial crises as well as exogenous shocks, with many observers using the reduction in reserves below this benchmark as a sign of fragility. This article provides a benefit-cost type approach to evaluating reserve adequacy. The benefits of holding reserves are evaluated using a dynamic random effects probit model of financial crises while the cost of reserve holdings (output loss due to an over-investment in reserves) is obtained from a panel growth equation. Using the methodology outlined above, the study finds that in small states, the optimal holding of foreign exchange reserves is approximately 25 weeks of imports, approximately 13 weeks higher than the international rule-of-thumb. This estimate of optimal reserve holdings is interrelated with the economic characteristics of the country, particularly its fiscal stance. Indeed, this article finds that countries with a prudent public expenditure management framework in place are able to hold a smaller stock of reserves without necessarily impacting the expected growth for the country. [ABSTRACT FROM AUTHOR]

This research examines the long-run Initial Public Offerings (IPO) stock performance of a large Chinese sample, and in particular the relationship between initial reserves (capital reserves and revenue reserves immediately after the IPO) and long-run IPO stock performance. In general, Chinese IPOs do not underperform the market/industry benchmarks, but they significantly underperform their sizematched industry peers. More importantly, Chinese IPO firms tend to issue a large amount of bonus shares (also called as a 'capitalization issue', i.e. capitalization of the reserves) after the IPO. Consistent with bonus share signaling hypothesis, Chinese IPO firms exhibit increased operating/stock performance subsequent to bonus issues. Interestingly, the size of the initial reserves is positively associated with long-run IPO stock performance. This research adds another piece of empirical evidence to the literature whether IPOs underperform in the long run, by confirming that the choice of performance measures and benchmarks could affect the conclusion on the IPO long-run performance. Further, it discovers that size of initial reserves could signal superior IPO stock performance in the long run. [ABSTRACT FROM AUTHOR]

This paper provides evidence that small and medium-size enterprises (SMEs) use a portion of private investments in public equity (PIPEs) for current research and development (R&D) investment, hold the rest in liquidity reserves such as cash assets and working capital, and ultimately use these reserves to smooth R&D investment. That is, PIPEs may have a direct effect on R&D investment and an indirect or smoothing effect using liquidity reserves. This paper also shows that innovative SMEs such as venture businesses, inno-biz firms, and management innovative firms are more likely to use PIPEs for R&D investment than are noninnovative SMEs. The implications of this paper are that PIPEs can be used as an important source of external financing to fund R&D investment and can be particularly valuable for R&D investment in innovative SMEs. [ABSTRACT FROM AUTHOR]

Currency devaluation or depreciation is said to temporarily worsen a country’s trade balance and improve it later, an effect that is called the J-Curve. Previous research that tested the J-Curve for Brazil used the country’s aggregate trade flows with the rest of the world and did not find support for the phenomenon. In this article, we consider the trade flows between Brazil and a major trading partner, the United States, disaggregating their trade flows by commodity. We then test the empirical validity of the J-Curve for each of the 92 industries that trade between the two countries. We find support for the phenomenon in 31 industries. Therefore, disaggregation by industry seems to yield some support for the phenomenon. [ABSTRACT FROM PUBLISHER]

The conventional Exchange Market Pressure Index (EMPI), originated from Girton and Roper (1977) and popularized by Eichengreen et al. (1994, 1995) and Weymark (1995), uses weighted average of loss of foreign reserves and depreciation of local currency to capture foreign exchange market pressure. However, it does not take into account the effect of capital control on foreign exchange market pressure. With effective capital control, the conventional EMPI tends to under- or overestimate the actual foreign exchange market pressure, depending on the magnitude of capital control. We adopt a monetary approach to derive a formula for new EMPI under capital control. Then we test the difference between the old and the new EMPI with China's data. The result shows that the conventional EMPI overestimates the actual foreign exchange market pressure by 91% in average. [ABSTRACT FROM AUTHOR]

In this article, we adopt a nonlinear approach to examine the dynamics of the international reserves holdings by the emerging economies. To do so, we estimate the demand for international reserves with a Panel Smooth Transition Regression (PSTR) model that loosens two restricting hypotheses, homogeneity and time-stability. We find evidence for the presence of a nonlinear behaviour in the demand for international reserves, a result that is new to the literature. The coefficients are found to change smoothly, as a function of two threshold variables - out of five candidates tested in total. Our specification accounts for the acceleration of foreign exchange reserves accumulation that the linear specifications fail to explain. [ABSTRACT FROM AUTHOR]

First generation crisis models suggest that the size of international reserves affects only the timing of a crisis while second generation models imply that higher reserves can reduce the probability of a crisis. First in the literature, this article suggests the 'rolling probit model' to successfully demonstrate that high reserves can be effective in offsetting vulnerable fundamentals in a vulnerable zone. The more vulnerable fundamentals in the vulnerable zone require higher levels of international reserves to reduce the probability of a crisis. If the fundamentals are sufficiently bad, the level of needed reserves may be explosive, which makes a crisis unavoidable. Unlike the arbitrary proposals of reserve adequacy measures in current literature, this article also sheds light on such measures based on the relationship between vulnerable fundamentals and high reserves. [ABSTRACT FROM AUTHOR]

Countries hold foreign currency reserves to support and influence exchange rate. This paper examines the causal relationship between exchange rate and reserves in six Asian countries. We obtain divergent evidence regarding the long-run and stable relationship between reserves and exchange rate in the sample countries. There is evidence of bidirectional causality between reserves and exchange rate in India, while no-causality in Bangladesh. There is unidirectional causality from reserves to exchange rate in Pakistan, Sri Lanka and Thailand and unidirectional causality from exchange rate to reserves in Philippines. It is concluded that holding of reserves is necessary for supporting exchange rate and vice versa. [ABSTRACT FROM AUTHOR]

The Federal Reserve has recently activated its newly acquired powers to pay interest on reserves of depository institutions. The Fed maintains that its new policy increases economic efficiency and intends it to play a lead role in the exit from quantitative easing. This paper argues it is a bad policy that has a deflationary bias; is costly to taxpayers, and that cost will increase as normal conditions return; and establishes institutional lock-in that obstructs desirable changes to regulatory policy. The paper recommends repealing the Fed's power to pay interest on bank reserves. Second, the Fed should repeal regulation Q, which prohibits payment of interest on demand deposits. Third, the Fed should immediately implement an alternative system of asset-based reserve requirements (liquidity ratios) that will improve monetary control and can help exit quantitative easing at no cost to the public purse. Now is the optimal time for this change. [ABSTRACT FROM AUTHOR]

This paper empirically investigates the importance of precautionary and mercantilist approaches to international reserves in the Indian context using monthly data from 1993:06 to 2007:03. The ARDL approach to cointegration is used to estimate as in the long-run relationship between reserves and its determinants. The empirical results show that the impact of the volatility of Foreign Institutional Investment which captures the precautionary motive, and that of undervalued real exchange rate which is associated with the mercantilist view on reserves are statistically significant in the long run. We conclude that both the precautionary and mercantilist motives explain reserve accumulation in India over the study period. [ABSTRACT FROM AUTHOR]

Following an analysis of the forces behind the so-called "global capital flows paradox" observed in the era of advancing financial globalization, this paper sets out to investigate the opportunity costs of self-insurance through precautionary reserve holdings. We reject the idea of reserves as low-cost protection against the vagaries of global finance. And we also deny that arrangements giving rise to their rapid accumulation may be sustainable in the first place. Alternative policy options open to developing countries are explored, designed to limit both the risks of financial globalization and costs of insurance-type responses. We propose comprehensive capital account management as an alternative to full capital account liberalization. The aims of a permanent regulatory regime of capital controls, both with respect to the aggregate size and the composition of capital flows, are twofold. The first aim is to maintain sufficient macro policy space. The second aim is to assure a good micro fit of external expertise incorporated in FDI with a country's development strategy. [ABSTRACT FROM AUTHOR]

We estimate China's demand for foreign reserves from 1994:1 to 2007:4. Using a monetary model for China's reserve demand, we take into account the People's Bank of China's systematic neutralization policy to reduce inflation. While ultimately inconsistent, this policy has led to a growth in foreign exchange reserves that seems limitless: a neutralization coefficient of 0.57 leading to a “magnification effect” on the increase in reserves of 2.3. That is, a purchase of foreign reserves leads to a contraction of domestic credit of 57% of the foreign exchange purchase, which in turn magnifies the surplus under a stable exchange rate. [ABSTRACT FROM AUTHOR]

We model the dollarization of three transitional economies in south-east Asia: Cambodia, Laos, and Vietnam which have been experiencing the transition and reform process of the economy for the time period 1992-2007. Based on Rojas-Suarez (IMF Working Paper WP/92/33, 1992) work, we examine whether the holdings of US dollars depend on the effect of the expected rate of depreciation in market exchange rates as expected by the model. Also, we examine whether the effects are proportional to the degree of the dollarization of the economy. The empirical results present that there are positive effects (expected) of the expected rate of depreciation in market exchange rates on the holdings of US dollars. The coefficients are statistically significant only for Cambodia and Laos, not for Vietnam. The effect is strongest for Cambodia, and this may reflect the fact that Cambodia's dollarization is stronger than those of Laos and Vietnam. [ABSTRACT FROM AUTHOR]

China's growing foreign exchange reserve is estimated to exceed $2 trillion by 2010. The purpose of its paper is to examine its impact on the balance sheet of the Chinese central bank, the money supply and the bond market. The paper will then move on to discuss its social welfare effect by comparing the estimated future return of the foreign exchange reserves with its opportunity costs measured by the potential return of domestic investments. [ABSTRACT FROM AUTHOR]

India's foreign exchange reserves have risen rapidly since the balance-of-payment crisis in 1991 to over US$155 billion by mid-2006. India is now the fifth largest Asian reserve holder. Despite this, scant attention has been paid to the rationale for and impact of reserves accumulation in India. This paper estimates the extent of de facto sterilization and capital mobility concurrently for the period 1990:q1-2004:q4. While India appears to have sterilized capital inflows quite aggressively, as the extent of de facto capital mobility continues to rise, it might become increasingly difficult to continue to sterilize going forward. [ABSTRACT FROM AUTHOR]

China now holds the world's largest foreign exchange reserves mainly thanks to dynamic export activities. In order to invest and manage these foreign exchange reserves, the Chinese government recently announced the constitution of a new State Foreign Exchange Investment Company (SFEIC) aimed at improving the yield on them. This new investment vehicle will face multiple challenges ranging from showing solid financial gains to establishing effective rules for corporate governance that guarantee transparency in company management. In addition to the legal aspects, numerous economic and political implications will arise from this new government-controlled tool. [ABSTRACT FROM AUTHOR]

Through a mathematical programming setup, reserve accounting is shown to be auxiliary to accomplishing monetary policy operating objectives. This article outlines a theoretical way of comparing the potency of open market operations under different reserve accounting procedures. It is shown that if the interest sensitivity of reservable liabilities is greater than the interest sensitivity of reserves, then lagged reserve accounting makes Federal Reserve open market purchases and ‘sells’ of securities more powerful in affecting the federal funds rate. [ABSTRACT FROM AUTHOR]

Value at Risk has lost the battle against Expected Shortfall on theoretical grounds, the latter satisfying all coherence properties while the former may, on carefully constructed cases, lack the sub-additivity property that is in a sense, the most important property a risk measure ought to satisfy. While the superiority of Expected Shortfall is evident as a theoretical tool, little has been researched on the properties of estimators proposed in the literature. Since those estimators are the real tools for calculating bank capital reserves in practice, the natural question that one may ask is whether a given estimator of Expected Shortfall also satisfies the coherence properties. In this paper, we show that it is possible to have estimators of Expected Shortfall that do not satisfy the sub-additivity condition. This finding should motivate risk managers and quantitative asset managers to investigate further the properties of the estimators of the risk measures they are currently utilizing. [ABSTRACT FROM AUTHOR]

A panel regression gives evidence that more flexibility in Asian exchange rates reduces risk associated with bank borrowing abroad, but deviations from mean exchange rates, and from the renminbi, increase risk. Since the exchange rate regime affects bank behavior and the incentives to hedge, the results broadly support the bank run over the moral hazard view of twin banking and currency crisis. The results suggest that flexibility in exchange rates is required for Asian EMEs, but the flexibility has to be limited, and it depends on more flexibility in the renminbi. This has implications for current global imbalances in reserves and feasible adjustment paths. [ABSTRACT FROM AUTHOR]

The determination of international reserve balance for emerging economies is part of the efforts to strengthen the immunity of these economies to crises. However, there is still evidence on crises even for the countries with large foreign reserves. It has usually been experienced that the countries with greatest need for reserves economize more than others on their holdings since they might underestimate the cost of crisis. In this study, the official international reserves of Turkey are tested against optimality and adequacy. During 1988–2002, the actual reserves fell short of both the optimal and the adequate levels. They are only optimal when the expected cumulative contraction is about 5.2% of real GDP under crisis. However, early evidence from emerging economies and Turkey show that crises hit more heavily. Hence, it is found that the current financial structure in Turkey such as the absence of capital controls and a highly dollarized banking system necessitates more foreign reserves for preventing any future economic and/or financial shocks. [ABSTRACT FROM AUTHOR]

In this paper, Lance Girton & Don Roper's (1977) monetary model of Exchange Market Pressure (EMP) is applied to the Turkish economy in the period of 1993-2004. The results provide strong evidence of negative relation between domestic credit and exchange market pressure (EMP) and indicate that the Central Bank of the Republic of Turkey (TCMB) absorbed most of the exchange market pressure by adjusting the foreign reserves. [ABSTRACT FROM AUTHOR]

Focuses on the economic cooperation between India and the United Arab Emirates in the 1990s. Maintenance of a high level of per capita income by United Arab Emirates; Amount of gross international reserves of India; Contribution of the oil sector to the UAE's gross domestic product.

A few studies have provided empirical support for the fact that the demand for international reserves experienced structural instability in 1973 and 1979 due to a change in exchange rate system and oil price shocks. Thus, under the current managed float due to exchange rate and oil price fluctuations, coefficient estimates could be time dependent. After showing that indeed, estimated coefficients are time dependent, the Kalman filter estimation method is employed and the reserve demand function for 19 industrial countries estimated. The Kalman filter approach incorporates the time-varying properties of coefficients estimates. [ABSTRACT FROM AUTHOR]

Investigates the doubling of reserve requirements between August 1936 and May 1937 of the Federal Reserve in the U.S. Effect on the increase of reserve ratio on bank lending; Need of additional capital on banks; Increase of business loans.

International application of the quantity theory of money in which money supply is replaced by international reserves and income by imports, has come under the heading of the demand for international reserves. Traditionally, the literature on the confidence problem has assumed a gold-dollar standard and is generally referred to as the "Triffin Dilemma." The liquidity problem relates to the issue of the quantity of international reserve, whereas the adjustment problem refers to the ability of nations to maintain or facilitate equilibrium in their balance of payments. Theoretical underpinnings of reserve demand incorporate macroeconomic factors, such as monetarism, as well as microeconomic central bank optimizing behaviour. The main determinants of reserve demand are intuitively appealing and empirical verification of them robust. The empirical literature can be divided in two distinct periods. The pre-1973 literature when most countries participated in the Bretton-Woods Agreement of fixed exchange rates from the end of the Second World War to March 1973.

Studies the feasibility and applicability of a currency board system in Turkey. Types of currency board systems; Feasibility conditions of a currency board; Money-supply theory in a currency board system; Relationship between the reserve money, foreign trade balance, public deposits and the foreign exchange deposit accounts; Cointegration analysis of the variables affecting the money-supply and reserve money.

Discusses the foreign debt problem of Russia. Foreign debt as a key factor in economic development; Details on the country's solvency and reserves for the reduction of capital outflow; Principal elements of the target position in the negotiations to settle foreign debt.

The rapid growth of the British Credit Union movement in the 1990s has been accompanied by low and declining levels of reserves relative to assets. This has occurred even though the movement has more than fulfilled its statutory obligations to contribute to reserves out of surplus. A model of credit union accounts is developed to illustrate the negative relationship between the change in savings and the dividend rate. It also considers lags in the use of new savings as a further factor. The analysis supports the conclusion of the Chief Registrar of Friendly Societies that the only way for British Credit Unions to achieve the statutory minimum reserve ratio within a reasonable period is to cut back on dividend payments. [ABSTRACT FROM AUTHOR]

This paper seeks to explore the possible long-run causal connection between the excess US bank reserves and the short-term interest rate differentials (differences between the federal funds rates and discount rates) within the well-known bivariate cointegration framework. It uses monthly data from February 1984 through March 1992. Each time series is nonstationary and reveals I (1) behaviour. There is evidence of a long-run equilibrium relation between the two variables. The estimates of the error-correction models reveal a unidirectional long-run causality flowing from the short-term interest rate differentials to the excess US bank reserves. [ABSTRACT FROM AUTHOR]

En a series of papers, Taylor (1971, 1977, 1979) has proposed a theoretical model of Credit Union behavior emphasizing their non-profit and cooperative nature. Taylor (1979) represents the model in its most developed form. In this note his work is surveyed and a modification is proposed, namely the incorporation of current period endogenous reserve accumulation, which is very important in practice and which, it is suggested, fills a significant gap and makes his model more satisfactory as a representation of credit union behaviour in periods of asset growth or decline. [ABSTRACT FROM AUTHOR]

This paper employs a version of the error correction model to investigate China's demand for international reserves in the period 1980:1 to 1990:4. China's officially quoted reserves included the net foreign exchange balance of the country's foreign exchange bank (Bank of China) during this period, but the reserves truly owned by the state were substantially smaller than the officially quoted reserves. We test the behaviour of both concepts and their relevance for decision making of reserve holdings. Factors derived under the traditional inventory models as well as disturbances from the domestic markets and debt repayment ability were considered. [ABSTRACT FROM AUTHOR]

There is a significant view being expressed lately, fortunately to date a minority opinion, that federal government deficits do not matter much. Or in any event, there is no urgency in coming to grips with them. In fact, deficits do matter. Over the long term, they have a corrosive effect on the economy, and it is from this perspective that the case for bringing down the deficit is compelling. More important, the long run is rapidly turning into the short run. If one does not act promptly, the imbalances in the economy are such that the effects of the deficit will be increasingly felt and with some immediacy. The effects of the federal budget deficits over the past several years have been muted by two circumstances, both of which are currently changing rapidly. One was the rather large degree of slack in the economy in the early years of the current expansion. This slack meant that the economy could accommodate growing demands from both the private and public sectors. In addition, to the extent that these demands could not be accommodated from U.S. resources, the industrialists went abroad and imported them. This can be seen in our large trade and current-account deficits.

Examines the determinants of use of Special Drawing Rights (SDR) or additions to the stock of international liquid reserves created by the International Monetary Fund. Simple behavioral models that will explain the use of SDR; Role of SDR in the reserve portfolios of less developed countries; Role of the international reserve asset in the international financial decisions of less developed countries.

Recent literature contains several theories of how self-enforcing agreements rely on repeat-purchase mechanisms to ensure product quality. Some have suggested the use of advertising as a signal of future actions in such games. This article extends these recent studies for the case where firms face temporary changes in cost or demand curves and offers an initial attempt at providing a statistical test of the Klein-Leffler model. It is found that the deviations in the advertising-sales ratio from the levels that can be explained by industry-specific characteristics are consistently contrary to what their model predicts. These results hold over a very wide range of depreciation rates for advertising and for the many individual industries examined. The results are only weakly affected when the presence of measurement error is explicitly recognized.
Klein and Leffler (1981) have addressed the issue of market transactions in the absence of a third party enforcer. Where such third party enforcement mechanisms are relatively costly, their intuitively enticing alternative relies on the threatened loss of an earnings stream to an investment in brand name capital for assuring contract performances. Similar models using repeat-purchase mechanisms to ensure quality are provided in Fama (1980), Telser (1980), Kihlstrom and Riordan (1984) and Milgrom and Roberts (1986).[1] Others such as Nelson (1970, 1974, 1978) and again Telser (1980), Kihlstrom and Riordan (1984) and Milgrom and Roberts (1986) have also mentioned advertising outlays as a signal of product quality. The aim here is to examine the robustness of the Klein and Leffler model, specifically where consumers do not possess full knowledge of cost conditions and when temporary movements are introduced in the firm's cost or demand curves. The following sections will summarize the Klein-Leffler model and develop its implications. Evidence on the testable implications of the model will also be examined. [ABSTRACT FROM AUTHOR]

This paper differs from his in the following manner. First, the reserve demand equation is estimated for developed (DCs) as well as less developed countries (LDCs). Second, the estimation period is the current floating rate period of 1973-80 rather than the fixed rate period of 1964-72. Finally, quarterly data is used rather than annual data.
Section II of the paper presents the reserve demand equation that is to be estimated. Section III provides a test of serial correlation and heteroscedasticity. Section IV presents the results of estimation and evidence in support of the square-root law. Section V sheds some empirical light on the dynamic adjustment of reserves. Finally, the concluding remarks are provided in Section VI. Data definitions and sources are listed in the Appendix. [ABSTRACT FROM AUTHOR]

In the last decade many countries have preferred to move to a system of managed floating that is intermediate between the extremes of fixed rates and a clean float. Since managing the float requires international reserves, it is clear that the study of these reserves is as relevant today as it has been in the past.
There are at least six reviews of the literature relevant to this study: Clower and Lipsey (1968), Niehans (1970), Salant (1970), Grubel (1971), Williamson (1973) and Cohen (1975). The justification for writing this review is that since completion of the last survey, many papers have appeared which contribute to the stock of knowledge in this field. However, unlike the previous reviews which have concentrated on the broader issues pertaining to international liquidity, such as the demand for reserves, the supply of reserves, the composition and distribution of reserves, etc., this study focuses solely on surveying empirical studies bearing on the demand for international reserves.
This review will consist of five parts: the first will include a summary of the literature previous to the present managed floating rate system. The second part will be devoted to the description of the empirical literature during the present system. The third part describes the empirical problems of the relevant studies. Our concluding remarks are provided in part four and finally, in part five, a table will be presented containing the features of major demand for reserve studies. [ABSTRACT FROM AUTHOR]

In a recent article (Coghlan, 1978b) I outlined a model of the money supply which laid emphasis on the demand for credit as opposed to the more usual exogenous issue of high powered money. This argument was developed within the context of a closed economy, and the objective of this paper is to extend the analysis to an open economy, in particular to derive the implications of this view for the international monetary approach to the balance of payments. This is not simply an abstract academic exercise, but should be of practical relevance; particularly given the growing importance of this latter approach in analysing and interpreting economic behaviour and policy.
The paper is divided into three quite distinct, but inter-related, parts. The next section argues that the international monetarist approach is deficient in not recognising an independent demand for credit, in addition to the demand for money. Because our main concern is with the practical application of the monetary approach, this is followed by an analysis of UK monetary and balance of payments statistics in order to demonstrate how the monetary approach can be interpreted in practice. This analysis reveals clearly the scope which exists for governments to sterilize external flows, and the implication for non-symmetrical adjustment is briefly discussed in the final section. [ABSTRACT FROM AUTHOR]

The objective of this paper is to consider the various 'solutions' to the sterling problem that have been proposed, appraise their propriety, consider their impact and, on the basis of past experience, advance tentative predictions about the prospects of phasing out the reserve role of sterling. The January 1977 Basle Agreement has been welcomed by economists as well as policy makers as the first step towards the elimination of the reserve function of sterling. Similar sentiments were expressed following the 1968 Basle Agreement. It will be argued that the latter in effect made inevitable the 1977 Basle Agreement. The analysis of the sterling problem will be confined to the period 1962-1976. This choice was determined by the existence of a comparable and consistent data series for sterling balances. [ABSTRACT FROM AUTHOR]

The supply of products which are non-storable at economic cost levels poses many interesting economic problems. Foremost among these is that of what is termed peak load pricing within the context of marginal cost pricing. In this paper we have considered another of these problems, that of the provision of 'optimum' reserve capacity margins. This problem is of importance in a number of industries, such as electricity supply, water, gas and telephones. The approach adopted in this paper was to apply the concept of willingness to pay to the problem of both identifying and measuring the costs and benefits associated with a change in the size of the reserve capacity margin. Although power cuts are unpopular, in view of the high costs to a nation of providing the reserve capacity margin, it is argued that the determination of the optimum size of this margin should be related to an attempt to measure its associated costs and benefits rather than simply trying to meet some arbitrarily established reserve capacity criterion. [ABSTRACT FROM AUTHOR]

Tests the validity of 'reserve price setting' and 'reserve quantity setting' behavior of the monetary authorities. Control of the monetary authorities on short-term interest rates as an exogenous policy instrument; Role of market forces in the determination of long-term rates; Dependence of long-term rates on market participants' collective expections of the level of future short-term rates.

Develops a simultaneous model of demand for and supply of international reserves. Theoretic specifications of the demand and supply functions of international reserves; Elimination of the assumption of elastic supply by specifying a supply function; Incorporation of the gold price into the model.

Looks at the contemporaneous reserve accounting (CRA) of the Federal Reserve System aimed to strengthen the relationship between reserve growth and money growth in the U.S. Recognition of the joint influence of the Federal Reserve, the banks and the public; Procyclical gyrations in reserve growth; Advantages of CRA over lagged reserve accounting; Adoption of short and long-term variable-rate financial instruments.