Previous research that has tested the stability of the reserve demand function uses panel data, without incorporating any adjustment process into the testing procedure when providing evidence of instability in reserve demand. In this article, we use time-series data, as well as a bounds testing...

The transition economies of Eastern Europe, much like Latin America, have attracted a great deal of capital and thus become vulnerable to external crises. As a result, assessing the volatility of capital movements, and distinguishing between stable and transitory flows, is particularly...

Cointegration analysis is often used in empirical studies of Purchasing Power Parity (PPP) to test whether there is a long-run relationship among countries' bilateral exchange rates and price levels. But the presence of a cointegrated relationship is not enough to support PPP, as other...