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Remittances and the real effective exchange rates in MENA countries: What is the long run impact?

Author

Listed:
  • Mariem Brahim

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

  • Nader Nefzi

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

  • Hamed Sambo

    (Centre d'Economie de l'Université de Paris Nord (CEPN))

Abstract

The aim of this paper is to examine the effect of remittances on real effective exchange rate in MENA countries using an autoregressive distributive lag (ARDL) model and three estimators, namely the Pooled Mean Group estimator, the Mean Group estimator and the dynamics common correlated effects estimator. We use data from 9 countries of MENA region for the 1980-2015 period. On the long-run, we find that migrants’ remittances towards the whole MENA countries negatively and significantly affect the real effective exchange rate. Indeed, the increase in remittances leads to a depreciation of the real exchange rate, meaning that remittances do not deteriorate the price competitiveness of the recipient countries in the long-run. Therefore, remittances do not cause the Dutch disease’s risk in MENA countries.

Suggested Citation

  • Mariem Brahim & Nader Nefzi & Hamed Sambo, 2017. "Remittances and the real effective exchange rates in MENA countries: What is the long run impact?," CEPN Working Papers 2017-15, Centre d'Economie de l'Université de Paris Nord.
    • Handle: RePEc:upn:wpaper:2017-15
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    More about this item

    Keywords

    Migration; Remittances; Real effective exchange rate; Dutch Disease; Monetary policy; MENA; ARDL;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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