Modelling the impacts of remittances on real exchange rate of Nigeria's Naira

Do Migrant Remittances Cause Dutch Disease in Nigeria?

“…Several studies (Sultonov, ; Hassan and Holmes, ; Kyzy, ; Ryota, ; Brahim et al., , among others) reported that the real effective exchange rate describes the purchasing power and trade competitiveness more effectively, and therefore is more suitable and widely used in the diagnosis of “Dutch Disease” than the real and the nominal exchange rate. In other words, the findings of Osigwe and Obi () did not explicitly show whether the inflow of remittances cause Dutch disease in Nigeria or not; neither did it link its finding to export competitiveness. Osigwe and Obi () also reported that the real exchange rate of Naira is integrated of order one just like other variables in their model, which motivated their use of Error Correction Model (ECM) in the study.…”

“…In other words, the findings of Osigwe and Obi (2016) did not explicitly show whether the inflow of remittances cause Dutch disease in Nigeria or not; neither did it link its finding to export competitiveness. Osigwe and Obi (2016) also reported that the real exchange rate of Naira is integrated of order one just like other variables in their model, which motivated their use of Error Correction Model (ECM) in the study. However, preliminary analysis of the updated data show that the real effective exchange rate, which this article used, is stationary at level, while some of the explanatory variables are integrated of order one, making the application of the ECM erroneous in the analysis.…”

“…Eromenko () finds the symptoms of Dutch disease through remittance inflows in Kyrgyzstan and Tajikistan using Panel data model, while Nguyen (), using the ordinary least squares (OLS) technique find that a 10 per cent increase in remittances increases the real effective exchange rate by 3 per cent, leading to Dutch disease in Vietnam. In Nigeria, Osigwe and Obi () used the Error Correction Model and data covering 1980–2012 period to show that received remittances impacted positively on the exchange rate in the long run.…”

Remittances and Real Exchange Rates in South Asia: The Case of Nepal

“…This finding controls for the endogeneity of remittances and financial development, does not depend on the particular measure of financial sector development used, and is robust to a number of robustness tests, including threshold estimation. We also provide evidence that there could be an investment channel trough which remittances can promote growth especially when the financial sector does not meet the credit needs of the population.‖ Osigwe and Obi (2016) evaluate the impact of remittances on the real exchange rate of Nigeria's Naira. The results of cointegration analysis indicate evidence of a long run relationship among the variables whereas the normalized cointegration coefficients of the variables show that all the variables significantly affect the real exchange rate.…”

“…Many papers have investigated relationships between remittance and exchange rates covering individual or group of developing counties. For example, see Barajas et al (2010); Barrett (2013); Hassan and Holmes (2013); Giuliano and Ruiz-Arranz (2009); Mongardini and Rayner (2009) and Osigwe and Obi (2016). No academic research has documented the phenomenon in Nepal.…”