Remittances and the real effective exchange rate

Hassan, Gazi and Holmes, Mark (2012): Remittances and the real effective exchange rate.

Abstract

We examine the long-run relationship between remittances and the real exchange rate for less developed countries using a panel cointegration approach. We employ 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. Short-run confirmation is given by a panel error correction model. Potential asymmetries in this relationship are explored using quantile regression analysis.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances; Real Effective Exchange Rate; Panel cointegration; Panel error correction; Quantile regression
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; F - International Economics > F0 - General; F - International Economics > F1 - Trade; F - International Economics > F2 - International Factor Movements and International Business > F24 - Remittances

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