Studying the flip side of migrant remittances: A panel cointegration analysis of 18 selected Asian countries

This study is an attempt to gauge the effect of remittances on Real Effective Exchange Rate (REER) with the help of a panel of 18 selected Asian countries. The period considered for this study is from 1998 to 2016. To achieve the objective of the study, along with Pedroni panel cointegration techniq...

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Bibliographic Details
Published inJournal of public affairs Vol. 22; no. 4
Main Author Dutta, Ujjal Protim
Format Journal Article
LanguageEnglish
Published London Wiley Subscription Services, Inc 01.11.2022
Subjects
Appreciation
Asian countries
Foreign exchange rates
Longitudinal studies
Natural resources
panel data
real effective exchange rate
Remittances
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Summary:This study is an attempt to gauge the effect of remittances on Real Effective Exchange Rate (REER) with the help of a panel of 18 selected Asian countries. The period considered for this study is from 1998 to 2016. To achieve the objective of the study, along with Pedroni panel cointegration technique, ‘Fully Modified Ordinary Least Square’ and ‘Dynamic Ordinary Least Square’ methods were applied. The results of the study suggest that remittances exert upward pressure on REER. In case of both the estimators (FMOLS and DOLS), the coefficient of remittances is negative and statistically significant at 1% level. Impulse response functions (IRFs) derived from the Panel Vector Auto Regressive model (PVAR) exhibits similar kind of results. The results obtained from this study raise the concerns similar to the ones raised by the Dutch disease or discoveries of natural resources leading to the appreciation of REER.
ISSN:1472-3891
1479-1854
DOI:10.1002/pa.2665