Abstract
This study evaluated the impact of remittances on the real exchange rate of Nigeria's Naira. The results of the cointegration analysis indicated evidence of a long run relationship among the variables whereas the normalised cointegrating coefficients of the variables showed that all the variables significantly affect RER. We found that remittances received, measure of openness of the economy, nominal exchange rate, terms of trade, growth of RGDP positively impacted on RER in the long run. On the contrary, ratio of government consumption to GDP and price level negatively affected RER in the long run. The results for the estimated short run coefficients based on parsimonious error correction model revealed that REMIT had negative and significant relationship with RER in the first and third periods lag. The Breush-Godfrey serial correlation LM test indicated that the model of this study is not dogged by autocorrelation of any order.
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