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Remittances and Real Exchange Rate: Latest Evidence from Cochrane Orcutt Econometric Model

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  • Olatunji Abdul Shobande
  • Oladimeji Tomiwa Shodipe

Abstract

We examine the impact of remittances on the real exchange rate in South-Africa using Cochrane-Orcutt Ordinary Least Square. The study finds out that remittances do not show any relationship with Rand in the foreign exchange market but certain factors like income, gross fixed capital formation and trade are significant to explain the dynamics in foreign exchange rate of South-African currency. The study suggests domestication of the excessive desire for western products, and provision of necessary incentives for local substitute companies to curb negative impact of trade on the foreign exchange rate. The study is constrained in so many ways, but one important area future research will like to investigate is how underground remittances operates to influence the dynamics in the real exchange rate.

Suggested Citation

  • Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Remittances and Real Exchange Rate: Latest Evidence from Cochrane Orcutt Econometric Model," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(2), pages 166-172, June.
    • Handle: RePEc:khe:scajes:v:5:y:2019:i:2:p:166-172
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    References listed on IDEAS

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    More about this item

    Keywords

    Migrants; exchange rate; capital flow; Cochrane-Orcutt; South Africa;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • F3 - International Economics - - International Finance
    • F29 - International Economics - - International Factor Movements and International Business - - - Other

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