Examining the asymmetric effects of oil price shocks on remittances inflows: evidence from Nigeria

Abstract

This paper examines the asymmetric impact of oil prices on remittance inflows in Nigeria based on annual data over 1981-2018. The study employs the nonlinear autoregressive distributed lag approach, which allows testing the short-and long-run asymmetric response of remittances inflows to positive and negative innovations in oil prices. The results confirm a long-run relationship between remittance inflows, exchange rate, misery index, gross domestic product per capita, and oil prices. The results show that changes in oil price have an asymmetric effect on remittance inflows in the short run but not in the long run. Moreover, exchange rate appreciation and depreciation have different impact on remittances inflows in both the short and long run. Exchange rate depreciation hurts remittance inflows. GDP per capita harms remittances inflows not only in the short run but also in the long run. Nigerian authorities implement necessary measures to enhance the efficiency of migration process and ensure appropriate exchange rate value.

Asymmetric relationship between oil prices and remittances in oil‐importing and ‐exporting countries: Evidence from sub‐Saharan Africa

“…A decrease in the oil price (negative shocks) positively affects remittances, suggesting that a decline in oil price leads to a decrease in remittances. This finding is in line with Nigeria's Akinlo and Ojo (2021). The results also show that an increase in GDP leads to an increase in remittances in the long‐run.…”

“…This study investigates if remittance inflows depend on oil price shocks. Therefore, this study modified studies by Akçay (2019Akçay ( , 2021 and Akinlo and Ojo (2021). Thus, Model 1 explores the asymmetry impact of oil prices on SSA's remittances in oil-exporting and oil-importing nations.…”