Asymmetric impact of migrants’ remittances on real effective exchange rate in Morocco

Abstract

Earlier studies analysing the impact of remittances affect the exchange rate were based on a symmetric approach, assuming that this impact is symmetrically. This paper examines the asymmetric impact of remittances on real effective exchange rate (REER) in Morocco. Our results show that, in both the long and short term, remittances have a negative impact on REER, which reject "dutch disease" hypothesis in the Moroccan context. The results further demonstrate a long-term asymmetric effect of remittances on REER. In light of these findings, it is recommended that Moroccan authorities should implement policies to pool and reallocate Moroccan migrants' savings towards productive investment, thereby reinforcing financial inclusion and providing tailored financial services to families left behind in receipt of these remittances.