Linear and Nonlinear Relationship Between International Reserves and Economic Growth
Exploring the Relationship Between International Reserves and Economic Growth
Keywords:
linear causality tests, nonlinear causality tests, international reserves, economic growth, oil and gas industry, foreign exchange reserves, developing countries, panel smooth transition model, homogeneity, time-stability, central bank, custodian, foreign currency, Indian government, policymakersAbstract
This investigation employs both linear and nonlinear causality tests to probe the nature of theunderlying causal link between the two variables. These findings inform our recommendation to thepolicymakers in the Indian government that they support efforts to develop and recover the oil and gasindustry in order to realize the country's economic growth potential. foreign exchange reserves thatdeveloping countries have amassed. We achieve this by estimating the need for foreign exchangereserves using a panel smooth transition model, which relaxes two limiting hypotheses, homogeneityand time-stability. The central bank of a country is the custodian of the nation's foreign currencyreserves, often known as international reserves (IR).References
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