Foreign Exchange Reserves and Economic Growth of Brazil: A Nonlinear Approach
https://doi.org/10.26794/2587-5671-2024-28-1-145-154
Abstract
The research aims to look at the linear and nonlinear causal relationships between Brazil’s accumulated international reserves and economic growth from 1989 Q1 through 2021 Q4. For empirical investigation, this study employed econometric procedures such as the Augmented Dickey Fuller and Zivot-Andrews unit root tests, the linear Granger causality test, Johansen’s cointegration test, the BDS test, and the nonlinear Granger causality test proposed by Hiemstra and Jones. The study concluded that there is a bidirectional linear and non-linear causality between foreign exchange reserve and economic growth. This study fills the gap in the literature by exploring the nonlinear relationship between international reserves and economic growth, while earlier studies primarily explored linear relationships. Foreign trade policymakers can utilize the model developed here to formulate applicable policies about foreign exchange reserves. Based on the findings, the study proposes that Brazil can accrue foreign reserves if surplus assets are invested in alternate sources such as economic infrastructure projects and regional infrastructure development.
About the Authors
M. Kashif
Graphic Era Deemed to be University
India
India
Mohammad Kashif — PhD, Assist. Prof., Department of Management studies
Dehradun
N. Singhal
IIMT University
India
India
Nikita Singhal — PhD, Associate Prof., School of Commerce and Management
Meerut
S. Goyal
Amity University
India
India
Shikha Goyal — PhD, Assist. Prof, Amity Law School
Noida
S. K. Singh
IIMT University
India
India
Satish Kumar Singh — PhD, Professor & Dean, School of Commerce and Management
Meerut
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Review
For citations:
Kashif M., Singhal N., Goyal S., Singh S.K. Foreign Exchange Reserves and Economic Growth of Brazil: A Nonlinear Approach. Finance: Theory and Practice. 2024;28(1):145-154. https://doi.org/10.26794/2587-5671-2024-28-1-145-154
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