Remittances and the real effective exchange rate
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.
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