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Serial number: 13/2014
Author(s): S.Huseynov, R.Rahmanov, Sh.Adigozalov
Language: Azerbaijani
Date: 2014
Abstract: The main purpose of this paper is to estimate the optimal level of foreign exchange reserves. For this purpose, we use the stochastic process model developed by Frenkel and Jovanovic (1981). When we estimate the model, we assume the balance of payments equilibrium. Furthermore, to compute the conditional variable, we use the GARCH model.
By maintaining the level of foreign exchange reserves at the optimal level, the Central Bank can secure macroeconomic stability and use the reserves more effectively.
Key words: Foreign reserves, optimal level, macroeconomic stability
JEL classification: E58, F32
