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Remittances and the real effective exchange rate

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  • Hassan, Gazi
  • Holmes, Mark

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.

Suggested Citation

  • Hassan, Gazi & Holmes, Mark, 2012. "Remittances and the real effective exchange rate," MPRA Paper 40084, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40084
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Remittances; Real Effective Exchange Rate; Panel cointegration; Panel error correction; Quantile regression;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F0 - International Economics - - General
    • F1 - International Economics - - Trade
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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