Remittances and the real effective exchange rate

Gazi Hassan () and Mark Holmes ()

Applied Economics, 2013, vol. 45, issue 35, 4959-4970

Abstract: We examine the long-run relationship between remittances and the real exchange rate for less-developed countries. In a key departure from the literature, we employ a panel cointegration approach using an innovative method for the measurement of the multilateral real effective exchange rate and we focus on high-remittance economies. We find a small inelastic, but significant, long-run relationship which confirms a Dutch disease type effect. The short-run relationship is explored using a panel vector error correction model which confirms that short-run causality is unidirectional running from remittances to the exchange rate. Potential asymmetries in this relationship are identified using quantile regression analysis.

Date: 2013
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Citations: View citations in EconPapers (36)

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Working Paper: Remittances and the real effective exchange rate (2012)
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DOI: 10.1080/00036846.2013.808311

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