Do Migrant Remittances Cause Dutch Disease in Nigeria?

Urama, Nathaniel E.; Edeh, Henry Chukwuemeka; Urama, Edith C.

doi:10.1111/imig.12572

Cited by 10 publications

(7 citation statements)

References 20 publications

(31 reference statements)

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“…Yet, the authors showed that foreign direct investment, government spending and output growth help in reducing exchange rate fluctuations. Likewise, Urama et al (2019) scrutinized the determinants of Nigerian exchange rates volatility and found that economic openness increases Nigeria ERV showing a unidirectional causality running from trade openness to ERV. The study of Razak et al (2020) documented that trade openness has a positive impact on Malaysian ERV.…”

Section: Literature Reviewmentioning

confidence: 99%

Empirical determinants of exchange-rate volatility: evidence from selected Asian economies

Rashid

Basit

2021

JCEFTS

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Purpose This paper aims to explore the empirical determinants of exchange-rate volatility (ERV) in selected Asian economies, namely, Bangladesh, China, India, Indonesia, Malaysia and Pakistan. Specifically, it examines how the volatility of foreign reserves, government spending, industrial production, gold prices and terms of trade affect monthly ERV during the examined period. Design/methodology/approach The authors carry out the empirical analysis by using monthly data for the period January 1997–March 2019. First, the volatility of the underlying variables is measured based on the conditional variances obtained by estimating the univariate (generalized) autoregressive conditional heteroskedasticity [(G)ARCH] model for each variable during the study period. Next, the autoregressive conditional heteroscedasticity (ARCH)-Lagrange multiplier test is applied to ensure that there are no remaining ARCH effects in the residuals. Finally, the multivariate autoregressive-moving average-GARCH (1, 1) models are estimated to examine whether and how the volatility of the underlying variables affects ERV. Findings The results reveal that the current period volatility of exchange rates is significantly affected by ERV in the previous period in all selected countries. The results also indicate that the volatilities of the underlying macroeconomic variables are quite differently related to ERV in examined Asian countries. Foreign-reserve volatility (VFXRES) has negative and significant impacts on ERV in Bangladesh, China and Malaysia. Government-spending volatility is negatively related to ERV in India, whereas it is positively related to ERV in all other examined countries. The results also suggest that although terms-of-trade volatility reduces ERV in both Bangladesh and Pakistan, it amplifies ERV in the remaining examined countries. However, gold-price volatility (VGOLDP) significantly, positively contributes to ERV in Bangladesh, Indonesia and Malaysia. On the contrary, the higher volatility in industrial production (VIPI) results in lower ERV in Indonesia and Pakistan, whereas it increases ERV in China, India and Malaysia. Practical implications The findings have several important policy implications. First, the findings suggest that both Bangladesh and Malaysia should keep an adequate level of foreign reserves to stabilize their foreign exchange rates. Second, as government-spending volatility has a vital role in determining ERV, it is necessary to bring sustainability and continuity in government expenditures. Bangladesh and Pakistan can stabilize their foreign exchange rates by making exports more competitive, viable and accessible. Originality/value This paper significantly contributes to the existing literature by exploring how the behavior of unexpected variations in the factors determining exchange rates affects ERV in selected Asia countries. Most of the published studies have examined the determinants of exchange rates by considering the macroeconomic variables at their levels. Departing from the existing studies, this paper significantly relates the volatility (second moment) of exchange rate determinants to the behavior of ERV. Further, this paper provides firsthand empirical evidence on this issue for the selected Asian economies.

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Section: Literature Reviewmentioning

confidence: 99%

Empirical determinants of exchange-rate volatility: evidence from selected Asian economies

Rashid

Basit

2021

JCEFTS

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“…The study employed unit root exams such as Augmented [17,18]. Table (1) offers the results of unit root checks that all variables are nonstationary at the level and become stationary. The computed fee of F-statistic indicates the confirmation of the association between real superb alternate charge and the rest of the independent variables like migrant remittances, inflation, and GDP per capita exists in the lengthy run because the computed cost is higher than the upper certain values in each model with and barring the interaction term.…”

Section: Results and Discussion Of Findingsmentioning

confidence: 99%

“…Temporary migrants encompass contract workers, inter-agency transferees, students, and businessmen whilst irregular people are those who continue to be in remote places illegally or on an expired visa on traveling. From Figure (1), we can see an inclining vogue of laborers' remittances and compensation of employees, which received a share of GDP from 12 months 1984 (1%) until it reached the peak in 2005 (19%). Since then, it diminished to 8% in 2011.…”

Section: Introductionmentioning

confidence: 99%

“…However, a few studies are searching into the difficulty of Dutch Disease resulting from the international transfers in this region. This paper attempts at analyzing the phenomenon in the context of Indonesia's economy, looking for proof of the Dutch disease [1]. We have a look at the effect of worker remittances on the country's actual alternate rate, from the 1984s, when Indonesia first started receiving remittances in a substantial quantity till the 2005s, tighter controls on money transfers led to a rapid increase in worker remittances sent via official channels.…”

Section: Introductionmentioning

confidence: 99%

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Do Migrant's Remittance Inflow Affects the Dutch Disease: Evidence from Indonesia

Shahvari

2022

IJIMES

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Remittances have grown in measurement and importance. While such inflows can improve economic growth, they may additionally also reason domestic foreign money to respect and hurt exports -an aspect of impact generally referred to as the Dutch disease. Statistics exhibit that remittances influx to Indonesia grew from 1% of GDP in 1984 to over 9% of GDP in 2020. Theoretically, such a massive influx of overseas foreign money into an economy may lead to Dutch diseases.Methodology: For this purpose, they learn about employing the Autoregressive Distributed Lag Model (ARDL) to observe the impact of migrant remittances on the actual fantastic exchange charge spanning the duration from 1984 to 2020. Findings: In the long run, they find out about finds an effective relationship between migrants' remittances and the real high-quality change rate, which means that evidence of Dutch Disease risk in Indonesia. This grasp of the Indonesia rupiah relative to different competing countries encourages import and discourages export, leading to the Dutch disease effect. Originality/Value: This study, therefore, investigated whether the large inflow of remittances into the economic system reasons Dutch disease.

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“…Sin embargo, no faltan investigaciones que alertan sobre una posible relación inversa entre esas variables (Giuliano y Ruiz-Arranz, 2009;Catrinescu et al, 2009) y en algunos casos se han explicado también las causas (Chami, Fullenkamp y Jahjah, 2005;Chami et al, 2008;Alonso y Sovilla, 2014). La principal razón de esta relación contra-intuitiva entre remesas y crecimiento económico en el país receptor es la enfermedad holandesa, fenómeno que ha sido objeto de varios estudios econométricos, sobre todo en economías en vía de desarrollo de América Latina, Asia y África (Faheem et al, 2022;Roy y Dixon, 2016;Chnaina y Makhlouf, 2015;Urama, Edeh y Urama, 2019;Owusu-Sekyere, Koekemoer Van Eyden y Kemegue, 2014). En este artículo investigamos el problema de la enfermedad holandesa atribuible a las remesas, pero desde un enfoque metodológico distinto que inserta las remesas en modelos macroeconómicos (Glytsos, 2005;Loser et al, 2006;Alonso y Sovilla, 2014;Rashid y Sharma, 2017).…”

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Impacto De Corto Y Largo Plazo De Las Remesas en Modelos Keynesianos

Sovilla

2022

Investigación Económica

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En este artículo sostenemos que las remesas pueden contraer la demanda agregada de las economías receptoras. En la primera parte de este trabajo estimamos un modelo estático para comprobar de manera analítica y gráfica el impacto de corto plazo de las remesas. Luego construimos un modelo dinámico mediante una simulación con desfases temporales que considera las variaciones de algunos parámetros de las funciones utilizadas. En la segunda parte, con base en el modelo de Kaldor, analizamos el impacto de las remesas en el proceso de acumulación y la distribución del ingreso en el largo plazo a través de las propensiones al consumo diferenciadas entre trabajadores y capitalistas y de una función inversión. SHORT-TERM AND LONG-TERM IMPACT OF REMITTANCES IN KEYNESIAN MODELSABSTRACTRemittances can have negative consequences on recipient economies, causing a contraction in aggregate demand. In the first part of this paper, we point out the short-run impact of remittances using a simplified static model that can be solved analytically and presented graphically. Subsequently, we carry out a simulation, introducing time lags that allow us to build a dynamic model and to consider the variations of some parameters of the functions used. In the second part we move on to a long-run analysis, using a model proposed by Kaldor, with consumption propensities differentiated between workers and capitalists and an investment function, which allow us to analyze the impact of remittances on the accumulation process and on income distribution.

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Do Migrant Remittances Cause Dutch Disease in Nigeria?

Cited by 10 publications

References 20 publications

Empirical determinants of exchange-rate volatility: evidence from selected Asian economies

Empirical determinants of exchange-rate volatility: evidence from selected Asian economies

Do Migrant's Remittance Inflow Affects the Dutch Disease: Evidence from Indonesia

Impacto De Corto Y Largo Plazo De Las Remesas en Modelos Keynesianos

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