Abstract
Migrant workers’ remittances to Haiti have been steadily increasing in the last 30 years and currently amount to around a quarter of the country’s GDP. This trend has turned Haiti into one of the most remittances’ dependent economies in the world, with potentially significant effects on its external competitiveness. Using an Error Correction Model approach, this chapter investigates the relationship between the increasing flow of remittances and the country’s real exchange rate. The results presented in this chapter suggest that the influx of workers’ remittances contributes significantly to the appreciation of Haiti’s real exchange rate in the long run, while that relationship is not significant in the short run. To conclude, the causality of the relationship as well as the policy implications of the results are discussed.
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Notes
- 1.
Haiti was under an economic and financial embargo at that time and suffered from significant capital outflows.
- 2.
Using GDP per capita at Purchasing Power Parity and constant 2017 international dollars.
- 3.
This is not to say that the national currency has not witnessed significant absolute nominal depreciation during that period, in particular during the last six years. However, when the rate of nominal depreciation is compared with a group of peer countries, it is far from being the most severe.
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Prophète, CH., Augustin, D. (2022). The Impact of Remittances on the Real Exchange Rate: Evidence from Haiti. In: Cannonier, C., Galloway Burke, M. (eds) Contemporary Issues Within Caribbean Economies. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-98865-4_8
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