DETERMINANTS OF FOREIGN EXCHANGE RESERVES IN SERBIA AND NORTH MACEDONIA

Abstract

This paper employs a quan-tile regression approach to explore the determinants and properties of interna-tional foreign exchange reserves in Serbia and North Macedonia, at various foreign exchange levels. The observed period cov-ers quarterly data for 2005q1–2019q1. The results reveal quantile-dependent de-terminants of foreign exchange reserves and enable comparison between the two countries, showing co-movements between monetary policy and economic fluctua-tions. Following the estimates obtained in this research, the paper compares the role of foreign exchange reserves in Serbia and North Macedonia.