A Comparative Analysis of the Effectiveness of Precautionary and Mercantilist Approaches to Accumulation of Foreign Exchange Reserves in Pakistan

Objective : This study explores and compares short-run long-run analyses of the validity precautionary mercantilist approaches to accumulation foreign exchange reserves (FER) in Pakistan. Research Design & Methods uses quarterly data from 1990 (1st) 2015 (4th). The autoregressive distributed lags (ARDL) test is used check for Findings empirical results reveal that Pakistan accumulates FER a motive. variables associated with motives are economically statistically important explaining accumulation. In contrast, linked significant, while insignificant Implications / Recommendations an underdeveloped economy like Pakistan’s, large volume international helps not only handling rate strategies, but also pursuing macroeconomic policies such as: export promotion, development projects, repayment debt, maintaining employment opportunities, improvement financial sector. Contribution econometric estimates show These true most research studies, including on China, we see literature.