Remittances, Exchange Rate, and Monetary Policy in Nigeria

1
Augustine C. Osigwe
Augustine C. Osigwe
2
Chekwube V. Madichie
Chekwube V. Madichie

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This study examined the relationship and causality that exist between remittance inflows and monetary aggregates, interest rate, exchange rate, and the domestic price level in Nigeria. The Johansen co-integration and the Granger causality techniques were employed. The Johansen co-integration test indicated that long run relationship among the variables. The Granger causality test results revealeda unidirectional causality running from money supply (LM2) to remittances (LREM) only at lag one and not in the reverse. In other lags, there was no evidence of causality between the duos. The results also showed that, consistently from lag one to lag five, causality run from exchange rate (LEXR) to LREM and not in reverse direction. Unidirectional causality run from interest rate (INT) to LREM, occurring from lag one to lag four. There was no evidence of causality in any direction between inflation rate (INF) and LREM within these lags. We also found that causality run from exchange rate (LEXR) to money supply (LM2) only at lags one and four and not in the reverse order.

Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

Augustine C. Osigwe. 2015. \u201cRemittances, Exchange Rate, and Monetary Policy in Nigeria\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 15 (GJMBR Volume 15 Issue B6): .

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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-B Classification: JEL Code: B22, C22, E4.
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v1.2

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September 4, 2015

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English

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This study examined the relationship and causality that exist between remittance inflows and monetary aggregates, interest rate, exchange rate, and the domestic price level in Nigeria. The Johansen co-integration and the Granger causality techniques were employed. The Johansen co-integration test indicated that long run relationship among the variables. The Granger causality test results revealeda unidirectional causality running from money supply (LM2) to remittances (LREM) only at lag one and not in the reverse. In other lags, there was no evidence of causality between the duos. The results also showed that, consistently from lag one to lag five, causality run from exchange rate (LEXR) to LREM and not in reverse direction. Unidirectional causality run from interest rate (INT) to LREM, occurring from lag one to lag four. There was no evidence of causality in any direction between inflation rate (INF) and LREM within these lags. We also found that causality run from exchange rate (LEXR) to money supply (LM2) only at lags one and four and not in the reverse order.

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Remittances, Exchange Rate, and Monetary Policy in Nigeria

Augustine C. Osigwe
Augustine C. Osigwe
Chekwube V. Madichie
Chekwube V. Madichie

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