An Empirical Analysis of Macroeconomic Variables Affecting Foreign Exchange Reserves Accumulation in India

Authors

  • Aruna Kumar Dash IBS Hyderabad, IFHE
  • C S Shylajan IBS Hyderabad, IFHE
  • Subhendu Dutta IBS Hyderabad, IFHE

Keywords:

Business, Economics, Finance, ARDL, Macroeconomics, Foreign Exchange, GDP

Abstract

This paper investigates the determinants of foreign exchange reserves in India by using Auto Regressive Distributed Lag (ARDL) model during 2000:Q1 to 2014: Q4 by using the variables such as foreign exchange reserve, nominal exchange rate, inflation, current account deficit, trade openness and short term debt/GDP. We found that in the long run, variables such as inflation and short term external debt/GDP affects the foreign exchange reserves. One percent increase in inflation reduces the foreign exchange reserves by 0.12% where as one percent increase in short term external debt/GDP increases the foreign exchange reserves by 0.46%. On the other hand, in the short run, exchange rate affects positively foreign exchange reserves of India.

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Published

2017-09-01

How to Cite

Dash, A. K., Shylajan, C. S., & Dutta, S. (2017). An Empirical Analysis of Macroeconomic Variables Affecting Foreign Exchange Reserves Accumulation in India. Journal of Applied Business and Economics, 19(5). Retrieved from https://articlegateway.com/index.php/JABE/article/view/723

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Section

Articles