The Tale of Three Amigos: Remittances, Exchange Rates, and Money Demand in Mexico
The author analyzes the relationship between remittances, exchange rates, and money demand in Mexico. He finds that shocks to remittances have a positive impact on domestic money demand. The results also suggest the existence of a bi-directional relationship between remittances and the exchange rate. Furthermore, positive shocks to remittances are found to have a negative impact on Mexico's real exchange rate. This indicates that remittances appreciate the Mexican peso and therefore may impact on the competitiveness of the tradable sector negatively. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.
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Volume (Year): 13 (2009)
Issue (Month): 1 (February)
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