Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/105427 
Year of Publication: 
2014
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2084-0845 [Volume:] 8 [Issue:] 3 [Publisher:] Vizja Press & IT [Place:] Warsaw [Year:] 2014 [Pages:] 289-298
Publisher: 
Vizja Press & IT, Warsaw
Abstract: 
This paper investigates the effect of remittance inflows on real exchange rates in sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 countries, the method of moments estimator developed by Arellano and Bover (1995) and the feasible generalized least squares estimator developed by Parks (1967) and Kmenta (1986). We find that when cross-sectional dependence and individual effects are controlled for, remittances to sub-Saharan Africa as a whole increase the underlying real exchange rates of recipient countries. However, this real exchange rate appreciation is mitigated by monetary policy interventions and the direction of fiscal expenditures towards tradable goods. Thus, the real exchange rate appreciation does not lead to the loss of export competitiveness or a worsening of the trade deficit in the countries in the panel.
Subjects: 
Dutch disease
remittances
real exchange rate
sub-Saharan Africa
JEL: 
C33
F24
F31
O55
Persistent Identifier of the first edition: 
Document Type: 
Article

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