The study aims to investigate the effect of macroeconomic indicators on foreign reserves in Pakistan. A Vector Autoregressive (VAR) model has been used to estimate Pakistan’s foreign exchange reserves demand from the period of 1984 to 2015. Findings/Originality : The results indicate that macroeconomic variables such as remittances, exchange rate, the ratio of current account deficit to GDP and interest rate differential (measure as opportunity cost) determine the country’s long-run reserves demand function. Whereas, observed results show that demand of foreign reserves is highly sensitive to capital account vulnerability and less responsive to its opportunity cost. The Granger causality analysis shows that the various macroeconomic variables fail to cause reverse causality. It implies that in Pakistan the demand of reserves is driven by macroeconomic stability. The study is helpful for the country’s institutions to boost foreign reserves by controlling macroeconomics indicators.

中文翻译：

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宏观经济变量对外汇储备的影响：以巴基斯坦为例

该研究旨在调查宏观经济指标对巴基斯坦外汇储备的影响。向量自回归 (VAR) 模型已被用于估计 1984 年至 2015 年期间巴基斯坦的外汇储备需求。 结果/原创性：结果表明宏观经济变量，如汇款、汇率、经常账户赤字与 GDP 的比率和利率差异（以机会成本衡量）决定了国家的长期储备需求函数。然而，观察到的结果表明，外汇储备需求对资本账户脆弱性高度敏感，对其机会成本的反应较弱。格兰杰因果关系分析表明，各种宏观经济变量均不会产生反向因果关系。这意味着在巴基斯坦，外汇储备的需求是由宏观经济稳定驱动的。该研究有助于国家机构通过控制宏观经济指标来增加外汇储备。