EconPapers    
Economics at your fingertips  
 

Remittances–exchange rate nexus: the U.S.–Mexico case

Matiur Rahman, Andrew Foshee and Muhammad Mustafa ()
Additional contact information
Muhammad Mustafa: McNeese State University, USA

Journal of Developing Areas, 2013, vol. 47, issue 1, 63-74

Abstract: This paper studies the long-run and short-run dynamics between emigrants’ nominal inbound remittances in U.S. dollar term to Mexico and the Peso-Dollar nominal exchange rates. Relatively high frequency monthly data from January 1987 through December 2008 are employed. Given the comparatively short sample period, the monthly data partially compensate for implementation of standard cointegration methodology. Empirically, both variables are found nonstationary in levels with I(1) behavior in terms of DF-GLS, Ng-Perron, and KPSS tests. The changes in exchange rate exert more pronounced influences on the changes of remittances in the long run as compared to the converse. Significant short-run interactive net positive feedback effects between the variables are also evidenced. On a net basis, Mexico should pursue an exchange rate policy that would promote remittance inflows from the USA for potential net economic gains without much apprehension of the so called Dutch Disease.

Keywords: Remittances; Exchange Rate; Cointegration; Causality; Feedbacks (search for similar items in EconPapers)
JEL-codes: F22 F31 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://muse.jhu.edu/journals/journal_of_developing_areas/v047/47.1.rahman01.html

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.47:year:2013:issue1:pp:63-74

Access Statistics for this article

More articles in Journal of Developing Areas from Tennessee State University, College of Business Contact information at EDIRC.
Series data maintained by Abu N.M. Wahid ().

 
Page updated 2017-09-29
Handle: RePEc:jda:journl:vol.47:year:2013:issue1:pp:63-74