Transmission Channels of Remittance to Tradable and Non-Tradable Sectors in Nigeria

Abstract

This study investigated transmission channels of remittances to tradable and non-tradable sectors in Nigeria using annual data ranging from 1981 to 2013. The study relied on VECM technique, with focus on variance decomposition. The basic findings were that the channels of remittance impact on tradable and non-tradable sectors in Nigeria is through demand or consumption and labour supply channels. While there was ample evidence to reject Dutch disease, phenomenon relating remittances to exchange rate, there should be conscious effort to encourage investing remittance spending rather than spending the remittances on consumption as noticed in the case of Nigeria.

Keywords: Dutch disease, Remittances and Exchange rate

JEL Classification: F40, F41, O10