The Tale of Three Amigos: Remittances, Exchange Rates, and Money Demand in Mexico

Carlos Vargas‐Silva
Authors registered in the RePEc Author Service: Carlos Vargas-Silva

Review of Development Economics, 2009, vol. 13, issue 1, 1-14

Abstract: The author analyzes the relationship between remittances, exchange rates, and money demand in Mexico. He finds that shocks to remittances have a positive impact on domestic money demand. The results also suggest the existence of a bi‐directional relationship between remittances and the exchange rate. Furthermore, positive shocks to remittances are found to have a negative impact on Mexico's real exchange rate. This indicates that remittances appreciate the Mexican peso and therefore may impact on the competitiveness of the tradable sector negatively.

Date: 2009
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1111/j.1467-9361.2008.00468.x

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Working Paper: The Tale of Three Amigos: Remittances, Exchange Rates and Money Demand in Mexico (2007)
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