Remittances and Real Effective Exchange Rate

Ujjal Protim Dutta and Partha Pratim Sengupta

South Asia Economic Journal, 2018, vol. 19, issue 1, 124-136

Abstract: Remittances in India have been growing rapidly since 1991. Most of the studies find that remittance has had a significant impact on real effective exchange rate (REER). It is imperative to evaluate the impact of a transfer such as remittance and aid on country’s competitiveness. This article is an attempt to investigate the impact of workers’ remittances and some selected macro-variables on REER of India using annual data from 1980–2015. The study conducted autoregressive distributive lag (ARDL) bound test co-integration approach to explore this long-run relationship. The ARDL bound test approach confirms significant long-run relationships among the selected variables at 1 per cent level of significance. In addition to this, the ARDL short-run error correction model implies that while REER may temporarily deviate from its long-run equilibrium, the deviations adjust towards the equilibrium level in the long run. JEL: F31, F35, F41

Keywords: Remittances; real effective exchange rate; official development assistance; competitiveness; co-integration (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sae:soueco:v:19:y:2018:i:1:p:124-136

DOI: 10.1177/1391561418761077

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