Moderating remittance and economic growth relationship with exchange rate: What new can we learn from Africa’s economy?

Figures & data

Table 1. Descriptive statistics

		GHANA		SOUTH AFRICA
	Remit	GDP	Exc	Remit	GDP	Exc
Mean	0.1078817	0.06975	−0.0539828	0.0001619	0.037729	−0.018464
Maximum	5.6752334	0.64313	0.8018555	0.3336513	0.422811	0.2612434
Minimum	−1.107829	−0.43769	−1.8427651	−0.329167	−0.27509	−0.275873
Std.dev.	0.9361488	0.16661	0.3528954	0.1365842	0.132589	0.0956359
Skweness	5.0587516	0.43396	−2.7754983	0.1645606	0.459796	0.2747525
Kurtosis	27.600936	3.28561	14.175708	0.0424162	0.51285	0.8822953
	UGANDA			MOROCCO
	Remit	GDP	Exc	Remit	GDP	Exc
Mean	0.0393698	0.0849	−0.0761476	0.0148372	0.044138	−0.000284
Maximum	0.471395	0.55394	0.2699624	0.4591976	0.261004	0.0319883
Minimum	−0.391201	−0.25915	−1.0581795	−0.480519	−0.2001	−0.048942
Std.dev.	0.1456165	0.18038	0.2223804	0.2189779	0.092709	0.0188722
Skweness	0.177465	0.79387	−2.1708045	−0.127424	−0.17247	−0.724322
Kurtosis	2.554401	0.7311	7.116857	−0.505376	−0.02138	0.5304003

Remit: Remittance, GDP: Gross Domestic Product, Exc: Exchange Rate

Figure 1. The left-hand side of plot represents the wavelet coherence between remittance and GDP. Right-hand position plots of partial wavelet coherence show remittance and GDP, removing the effect of exchange rates. The crosshatch reveals regions within the cone of influence (COI). The thick gray contour signifies the 95% confidence level. Arrows on the right-hand side suggest the comparative phase connection, leftward arrows represent antiphase, and upward pointing arrows imply remittance as leading.

Figure 1. Continued.

Figure 2. The left-hand side of the WC plot shows remittance and GDP. The right-hand side represents the PWC plot between remittance and GDP, removing the effect of exchange rates. The crosshatch reveals regions within the cone of influence (COI). The thick gray curve denotes the 95% confidence degree. Where arrows on the left-hand side reveal the comparative phase connection, a right-pointing arrow represents in-phase, upward pointing arrows suggest the leading of remittance, and pointing directly down implies the leading of GDP.

Figure 2. Continued.

Figure 3. The left-hand side of the WC plot shows the remittance and GDP relationship. Right-hand side shows the PWC plots for remittance and GDP, removing the effect of exchange rates. The crosshatch signifies regions inside the cone of influence (COI). The thick gray curve suggests the 95% confidence point. The right-hand side arrows reveal the comparative phase connection; arrows pointing left suggest antiphase and arrows pointing straight up imply the leading of remittance.

Figure 3. Continued.

Figure 4. The left-hand side of the WC plot shows the remittance and GDP relationship. The right-hand side shows the PWC plots of Remittance and GDP, removing the effect of exchange rates. The crosshatch signifies regions inside the cone of influence (COI). Thick gray curve suggests the 95% confidence point. On the left-hand side arrows reveal the comparative phase connection; arrows pointing right suggest in-phase and arrows pointing straight up implies remittance leads and pointing straight down indicates GDP lead.

Figure 4. Continued.

Table A1. Linear granger causality test results

REMITTANCE & GDP
Direction	T-statistics	p-value	Optimal Lag
GHANA
Remit ↛ GDP	7.8	0.26	6
GDP ↛ Remit	2.3	0.89
SOUTH AFRICA
Remit ↛ GDP	7.7	0.26	6
GDP ↛ Remit	9.5	0.15
UGANDA
Remit ↛ GDP	0.0015	0.97	1
GDP ↛ Remit	1.3	0.26
MOROCCO
Remit ↛ GDP	1.3	0.53	2
GDP ↛ Remit	3.3	0.19

$\left(\text{setbox}0=\to \text{t}o\text{wd}0\text{hss}/\text{hss}\text{box}0\right)$ represents the linear causality of the null hypothesis under the standard Granger causality test. AIC approach was employed to ascertain the optimal lag lengths for VAR(p). The results of the p-value are the corresponding p-values ${.}^c$, ${,}^{b}an{d}^a$ signify the significant levels of 10%, 5% and 1% respectively.

Nonlinear Granger causality estimated results

	REMITTANCE & GDP
Direction	ε = 0.5		ε = 1.5		ε = 2.0
	T statistic	p-value	T statistic	p-value	T statistic	p-value
GHANA
Remit ↛ GDP	****	****	−0.302	0.61858	−0.899	0.81568
GDP ↛ Remit	****	****	1.141	0.12698	1.036	0.15013
SOUTH AFRICA
Remit ↛ GDP	****	****	1.019	0.15418	−0.434	0.66784
GDP ↛ Remit	****	****	0.716	0.23697	0.279	0.38996
UGANDA
Remit ↛ GDP	0.709	0.23931	0.071	0.47167	0.467	0.32033
GDP ↛ Remit	0.713	0.2379	−1.832	0.96653	−2.558	0.99474
MOROCCO
Remit ↛ GDP	****	****	−0.246	0.59726	−1.724	0.95765
GDP ↛ Remit	−0.634	0.73705	0.866	0.19316	0.016	0.49368

The Table A2 accounts for the nonlinear causality test of Remittance and GDP. (↛) represents the non-causality null hypothesis. AIC approach was applied to establish the optimal lag lengths for VAR(p) . The corresponding p-values are presented. ${.}^c$, ${,}^{b}an{d}^a$ represent the significant levels of 10%, 5% and 1% respectively

Selected variables

Variables	Abbreviation	Variable Explanation	Data span	Source
Remittance	Remit	Personal remittances, paid (current US$)	1980–2020	World Bank staff estimates based on IMF balance of payments data.
Expenditure	Expend	General government final consumption expenditure (current US$)	1980–2020	World Bank national accounts data, and OECD National Accounts data files.
Capital	Capital	Gross fixed capital formation (current US$)	1980–2020	World Bank national accounts data, and OECD National Accounts data files.
Education	Educ	School enrolment, tertiary (% gross)	1980–2020	UNESCO Institute for Statistics (http://uis.unesco.org/). Data as of June 2022.
GDP	GDP	GDP (current US$)	1980–2020	World Bank national accounts data, and OECD National Accounts data files.
Broad Money	Bm	Broad money (% of GDP)	1980–2020	International Monetary Fund, International Financial Statistics and data files, and World Bank and OECD GDP estimates.
Exchange Rates	Exc	Real effective exchange rate index (2010 = 100)	1980–2020	International Monetary Fund, International Financial Statistics.
Inflation	Inf	Inflation, consumer prices (annual %)	1980–2020	International Monetary Fund, International Financial Statistics and data files.