Table 1.
Baseline Specification
| Fixed Effects | Random Effects | Arellano-Bond | Fixed Effects | |||
|---|---|---|---|---|---|---|
| 1947–2018 | 1947–2018 | 1947–2018 | 1947–1998 | 1999–2018 | 1947–2018 | |
| (1) | (2) | (3) | (4) | (5) | (6) | |
| Lagged Reserve Share | 0.888*** | 0.946*** | 0.908*** | 0.864*** | 0.758*** | 0.885*** |
| (0.004) | (0.015) | (0.014) | (0.013) | (0.059) | (0.003) | |
| Credibility | 0.046** | 0.040* | 0.044** | 0.055*** | 0.014 | 0.069*** |
| (0.016) | (0.022) | (0.018) | (0.014) | (0.036) | (0.013) | |
| GDP | –0.027 | 0.178*** | –0.122** | –0.523** | 0.209** | –0.072* |
| (0.03) | (0.057) | (0.051) | (0.197) | (0.067) | (0.038) | |
| Credibility * USD | –0.103*** | |||||
| (0.013) | ||||||
| GDP * USD | 0.052*** | |||||
| (0.015) | ||||||
| Observations | 315 | 315 | 300 | 207 | 108 | 315 |
| No. of groups | 11 | 11 | 11 | 7 | 8 | 11 |
| R-squared | 0.994 | 0.995 | 0.971 | 0.998 | 0.994 | |
| Hausman Test (p-value) | 0.004 | |||||
Robust standard errors in parentheses. ***, **, * indicates significance at the 1%, 5%, and 10% levels, respectively. All specifications include time fixed effects. Reserve shares are sourced from Eichengreen et al. (2016) for 1947–2013 and the Currency Composition of Official Foreign Exchange Reserves database for 2014–18. GDP data is sourced from the Maddison Project database for 1947–2016, with data for 2017 calculated using IMF data on GDP based on PPP. “Credibility” is the average appreciation of the reserve currency against the SDR in the previous five years. “GDP” is the share of world GDP, which the reserve currency issuer accounts for. “USD” is a dummy variable equal to one if the reserve currency is the US dollar and zero otherwise. “No of groups” refers to the number of reserve currencies included. PPP = purchasing power parity; SDR = special drawing rights.