The long-term effect of migrants remittances on the exchange rate in Algeria : An ARDL mode

Abstract

The study measured the effect of migrants’ remittances on the real effective exchange rate (REER) in Algeria in the long term during the period (1994-2020) by estimating the relationship between the latter and remittances with a number of other specific variables of the exchange rate, according to an ARDL model. The results showed the absence of a statistically significant relationship between migrants’ remittances and the REER, in contrast to some countries of the Maghreb and some other emerging economies. The absence of the effect of remittances on the REER is due to the weak volume of their flows compared to the size of the Algerian economy, in addition to their flow through informal channels, feeding the parallel exchange market as a result of the premium offered by the latter, thus the inability to measure the actual size of these flows, which was confirmed by the results of the study.