The Impact of Remittance Flow on Real Effective Exchange Rate: Empirical Evidence from The Gambia

Joof, Foday and Touray, Sheriff (2021): The Impact of Remittance Flow on Real Effective Exchange Rate: Empirical Evidence from The Gambia.

Abstract

The paper investigates the impact of remittance on real effective exchange rate in The Gambia. The Fully Modified OLS and Dynamic OLS are used on a monthly data from 2009M1 to 2019M12. FMOLS and DOLS estimations revealed that remittance has a positive significant impact on real effective exchange rate in The Gambia, implying that 1% increment in remittance leads to a real appreciation of the Gambian Dalasi (GMD) against the major currencies by 1.5%. Likewise, inflation is positively associated with REER, while the relationship amid foreign reserves and REER is inconclusive. Contrarily, money supply and monetary policy rate were found to have a depreciating impact on REER in both models.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittance, Real effective exchange rate, FMOLS, DOLS, The Gambia
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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