You are on page 1of 19

THE JOURNAL OF ENERGY

AND DEVELOPMENT

Farid Makhlouf and Kamal Kasmaoui,

“The Impact of Oil Price on Remittances:


The Case of Morocco,”
Volume 43, Number 2

Copyright 2018
THE IMPACT OF OIL PRICE ON REMITTANCES:
THE CASE OF MOROCCO

Farid Makhlouf and Kamal Kasmaoui*

Introduction

T his article examines the effects of an oil price shock on a small open economy
that imports oil and exports labor. It considers the variation of the price of oil
as an exogenous shock for the Moroccan economy. The theoretical context of this
article is at the level of the macroeconomic determinants of remittances. This

*Farid Makhlouf is an Associate Professor of Economics and Econometrics at Pau Business


School and an Associate Researcher at the Center for the Analysis of Trade and Economic
Transitions (CATT), Pau University, France. He specializes in the empirical studies of the
remittance phenomenon. His work mainly focuses on the reaction of migrants through their
remittances to shocks in their origin and host countries. The author holds a Ph.D. (with Distinction)
in economics from Pau University. In addition, Dr. Makhlouf advises Ph.D. and master students in
economics and his teaching experience includes various undergraduate and graduate-level courses in
macroeconomics, statistics, and econometrics. The author’s works have been published in Research
in International Business and Finance, Revue Africaine de Developpement, Economics Bulletin,
International Review of Applied Economics, Journal of Economic Development, and Empirical
Economics, as a sampling.
Kamal Kasmaoui is an economist, statistical expert, and researcher in development economics at
École Supérieure de Commerce (ESC), Pau Business School. He holds a Ph.D. (with
Distinction) in economics from Pau University and a master’s degree in mathematics, statistics,
and economics engineering from Bordeaux University. Dr. Kasmaoui’s areas of academic expertise
are econometrics, development and social economics, and well-being. His teaching experience
includes various undergraduate and graduate-level courses in monetary, banking, and financial
economics. The author’s works have been published in Economics Bulletin, along with occasional
papers and book chapters.
We are grateful to the anonymous referees. We also thank Charlotte Sers for her comments on the
earlier versions of this article.

The Journal of Energy and Development, Vol. 43, Nos. 1 and 2


Copyright Ó 2018 by the International Research Center for Energy and Economic Development
(ICEED). All rights reserved.
293
294 THE JOURNAL OF ENERGY AND DEVELOPMENT

paper tests the assumption that migrants sent money to help and to assist their
families to cope with the decline in purchasing power caused by the rise in the
price of oil. In order to test this, several statistical and dynamic estimates have
been established. Overall, our research finds that a 1-percent increase in oil prices
generates about a 0.5 percent to 1.15 percent increase in remittances according to
the techniques utilized.
This work seeks to contribute to the existing literature on the response of
migrants in terms of remittances following a macroeconomic shock in the country
of origin. What is the impact of a change in economic conditions in the home
countries on remittances? The variation in oil prices will cause variations in the
purchasing power of Moroccan households. This article finds that migrants react
positively following an increase in oil prices. This reaction can alleviate the po-
tential negative effects of oil price increases. We argue that remittances can
mitigate the effects of an oil price shock by increasing international remittances.
Morocco is a country of emigration, the main destination is Western Europe,
but other locations have appeared more recently in North America and the Gulf
countries.1 A Moroccan diaspora has formed over the years, which has forged
strong economic ties with Morocco. Additionally, Morocco is a net importer of oil
and imports most of the energy it consumes. Following the sharp rise in world oil
prices, the effects of rising oil prices in Morocco are beginning to be felt in the
overall economy. Indeed, Morocco’s oil bill was estimated at about U.S. $7 billion
in 2015 according to Perspective Monde. In recent years, consumer subsidies for
petroleum products have considerably widened the budget deficit to 7 percent of
the country’s gross domestic product (GDP) in 2012, before falling to 4.6 percent
of GDP in 2014.
The change in oil prices leads to fluctuations in the purchasing power of
Moroccan households. The oil price changes can impact the real economic ac-
tivities from both the supply and demand sides.2 Higher oil prices lead to inflation
by increasing production costs, resulting in lowering real income in the origin
countries.
In addressing this issue of remittances and oil price fluctuations in Morocco,
we have organized this article as follows. Next we present a review of the literature
followed by a section describing our data, methodological approach, and results.
The third section provides our conclusions and offers some policy implications
that are relevant for Morocco and other countries with robust remittance levels.

Literature Review

In the economic literature most studies seek to investigate the empirical re-
lationship between oil price and macroeconomic variables such as the exchange
rate, inflation, production, and consumption. There are few studies that attempt to
MOROCCO: OIL PRICES AND REMITTANCES 295

investigate the relationship between migrants’ remittances and oil price such as the
work by D. Barne and G. Naufal and A. Termos.3 However, the Moroccan situ-
ation has not been studied, which constitutes an interesting case given the weight
of remittances in the Moroccan economy. The share of remittances in the GDP was
6.8 percent in 2016 according to the World Bank. Remittances are Morocco’s
second largest source of currency after those generated by phosphate exports.
According to the theory of migrants’ motivations to remit, altruistic behavior is
a prime driver, which suggests that migrants send money based upon their family
needs.4 Economic literature highlights factors that may influence these flows and
that may be microeconomic or macroeconomic in basis. The microeconomic
determinants essentially are based on the characteristics of the individual immi-
grant and the individual’s family (age, sex, occupation, level of education, income,
etc.). With regard to the macroeconomic determinants, they are related to the
economic characteristics of the host country and the country of origin. First, the
migrant stock in the host country is one of the most important determinants of
remittances.5 R. Lucas and O. Stark argue that there are three main motivations to
send money to the home country—altruism, self-interest, and enlightened altru-
ism.6 Meanwhile, P. Karpestam and F. Andersson confirm that altruistic behavior
takes precedence over other behaviors in the case of 50 low- and middle-income
economies.7 The macroeconomic causes of remittances are mainly based on
macroeconomic characteristics of the host and origin countries of the immigrants,
such as the exchange rate, income, and inflation. C. Vargas-Silva and P. Huang
note that remittances react more to changes in the economic conditions of the host
country than to economic shocks in the origin country.8 Similarly, exchange rate
regimes and financial development effect remittances as suggested by I. Grabel.9
Exchange rates and the stock of migrants impact the level of remittances according
to I. Sirkeci et al.’s World Bank study.10 Along the same lines, D. Barro et al.
found that changes in exchange rates influence the decision to remit.11 In addition,
income in host countries positively impacts remittances according to the research
by M. I. T. El-Sakka and R. McNabb.12 Moreover, the level of economic in-
tegration between home and host countries may influence remittances as asserted
by R. Chami et al.’s International Monetary Fund working paper.13
B. Lowell and R. De La Garza show a negative relationship between time spent
in the United States and remittances from that country.14 However, R. Aggarwal
and A. Horowitz and K. Osaki find that there is no direct relationship between
time spent in a host country and remittances.15 Moreover, the political context
may influence the probability to remit as proposed by F. Arestoff et al. and
A. O’Mahony.16 Other literature, such as research by I. Elbadawi and R. Rocha and
J. Edelbloude et al., focuses on how political instability influences remittances.17
Additional unobservable factors also could determine the level of remittances,
such as the level of attachment to the country of origin as found in the research by
L. Miotti et al.18
296 THE JOURNAL OF ENERGY AND DEVELOPMENT

Empirical Investigations

Data: This section examines the effects of oil price changes on remittances.
The main assumption this section looks to test is the following: remittances
support household purchasing power to compensate for increasing oil prices. In
order to measure the impact of the change in oil prices on the response of migrants
to remittances, we utilize monthly remittance data covering the period from
January 2004 through December 2010 in our investigation. The definitions of the
variables are as follows: remittances inflows are in millions of U.S. dollars and
data are taken from the World Bank (Migration and Remittances Data); crude oil
price are in West Texas intermediate (WTI) price per barrel in U.S. dollars, which
is commonly used in the economic literature,19 and sourced from the U.S. Federal
Reserve Bank of St. Louis; the nominal effective exchange rate index is used as
defined by the International Monetary Fund (IMF) as “a measure of the value of
a currency against a weighted average of several foreign currencies;” inflation is
defined as a variation of the consumer price index; and the interest rate is the
money market rate. Data for the nominal effective exchange rate, inflation, and
interest rates are taken from the International Financial Statistics of the IMF.
Appendix table 1 shows the summary statistics for all variables used in the em-
pirical investigations and they are plotted in appendix figures 1A through 1E.
When assessing the impact of oil price on household budgets, we see that it may
result in budgetary constraints for the households. Indeed, as can be seen in the
scatterplot in appendix figure 2, the relationship between oil price and remittances
is positive. We witness rising oil prices corresponding to increases in remittances
to Morocco over the 2004 and 2010 period.
Baseline Models: The first step in the research is to examine the effects of oil
price on remittances by estimating the following model 1 as given in equation (1):

logðRt Þ ¼ b0 þ b1 logðOPt Þ þ X  þ et =et ;N ð0; s2 Þ ð1Þ

where t is time, R is monthly remittances inflows in millions of U.S. dollars, OP is


the crude oil price, X is the matrix of potential macroeconomic factors of re-
mittances such as the nominal effective exchange rate (Q),20 the interest rate
(Int),21 inflation (In),22 and, lastly, et is the error term. Further explanatory vari-
ables given in matrix X are commonly used in the economic literatures.23
Model 1 will be estimated by using several methods that include ordinary least
squares (OLS) regression, linear robust regression, instrumental variables (IV)
regression, and dynamic regression.
The idea behind the IV regression is to deal with the inverse causality between
remittances and the exchange rate. Several studies demonstrate the effects of
the remittances on exchange rate, namely, Y. Bourdet and H. Falck, P. Acosta
MOROCCO: OIL PRICES AND REMITTANCES 297

et al., F. Makhlouf and M. Mughal, and Chnaina and F. Makhlouf.24 The current
account is used as an instrument for the exchange rate to be validated, while the
dynamic regression can deal with autocorrelation of the error term.
Appendix tables 2 through 5 provide the test results for the OLS regression, the
linear robust regression, the IV regression, and the dynamic regression, respectively,
and indicate that the impact of oil price on remittances is positive and significant. Thus,
we find a positive reaction of remittances following a decline in the purchasing power
of the families of migrants who remained in Morocco. These results may confirm the
theory of altruism as offered by R. Lucas and O. Stark that migrants increase their
transfers following a negative shock in their home country.25 An increase in oil prices
will cause a loss of direct purchasing power of Moroccan households. This will then
lead the families to ask for more help from their friends and relatives residing abroad. It
has been noted that Moroccan migration is diversified among an array of host coun-
tries. There are host countries that are oil exporters, like the United Arab Emirates and
Saudi Arabia, and importing countries such as France and the Netherlands.
Vector Error-Correction Model (VECM): This subsection explores the re-
lationship between oil price and remittances using a vector autoregressive model
and vector error-correction. It is important to assess the long-run nature of the
relationship between remittances and oil price. Figure 1, showing the rise of re-
mittances following the increase in the price of oil, clearly illustrates that the
evolution of remittances and oil prices have the same overall trajectory. One can
see that the steep drop in oil prices in October 2008 was followed by a decline in
remittances. Between October and September 2008 crude oil prices dropped by 26
percent according to data from the Federal Reserve Bank of St. Louis, while re-
mittances decreased by only 4 percent according to World Bank data. Almost all
of the decrease in remittances was due to the financial crisis. Oil prices reached
a record high in June 2008 of $133.88 a barrel and the price had plummeted to
$76.61 in October 2008. In the space of two months, the price of oil dropped by 55
percent; this price decline was a result of the global financial crisis causing a de-
cline in demand.
Unit Root Tests: Next, we perform a unit root test, the results of which are
presented in table 1 and indicate that we can reject the unit root hypothesis for
remittances, oil price, and the exchange rate. After differencing these variables,
the unit root hypothesis was rejected.
Cointegration Test: The Johansen procedure will be used instead as it allows
to better control serial correlations. The linear combination of remittances and oil
price is I(0); there is a cointegration when yt  Xt f ¼ et and et is I(0) while the
explanatory variables are I(1), in others words, if the linear combination of re-
mittances and the explanatory variables is stationary. The cointegration test results
are presented in table 2.
298 THE JOURNAL OF ENERGY AND DEVELOPMENT

Figure 1
MONTHLY REMITTANCES INFLOWS TO MOROCCO (IN MILLIONS OF U.S. $) AND OIL
PRICE (IN U.S. $ PER BARREL), JANUARY 2004 TO DECEMBER 2010

Source: World Bank for remittances and Federal Reserve Bank of St. Louis for oil price.

The cointegration test suggests at most one long-run relationship. The VECM is
specified in equation (2):
DRt ¼ aDOPt þ bðRt1  aOPt1  bÞ þ jt =b < 0 ð2Þ

where ΔRt is the first difference of remittances and ΔOP is the first difference in
crude oil price. The results from the estimation equation (2) are given in table 3.
Recall that the main hypothesis that will be tested in this article is that mi-
grants’ remittances react positively to the decrease of households’ purchasing
power caused by rising oil prices.
Today, Morocco is heavily dependent on imports of energy resources (nearly
90 percent of energy needs). Since the beginning of the 20th century, this nation
has experienced a steady increase in energy demand, linked to industrialization,
economic development, and a growing standard of living. Over the past 25 years,
demand has grown 6 to 7 percent a year on average.
A long-run causal relationship between oil price and remittances is found. The
empirical results show that the remittances are driven by oil price and indicate that
a 1-percent increase in oil price would increase the amount of remittances by 0.62
percent in the case of Morocco. This finding suggests that the effects of high oil
MOROCCO: OIL PRICES AND REMITTANCES 299

Table 1
UNIT ROOT TEST

Dickey-Fuller Test: Alternative Hypothesis: Stationary


Levels 1st Difference

–3.1233 (3) –4.9818(3)


p-value = 0.1151 p-value = 0.01
Remittances (Rt) I(1) I(0)
–2.9901(3) –3.9379 (3)
p-value = 0.1698 p-value = 0.01655
Oil price (OPt) I(1) I(0)
–1.7982 (4) –4.9818 (4)
p-value= 0.6586 p-value = 0.01
Exchange rate (Q) I(1) I(0)
T-stat (lags)

Source: Authors’ calculations.

prices on household purchasing power can be moderated by an increase in mi-


grants’ remittances.
Mechanisms: This subsection looks to identify channels by which variations in
oil prices impact remittances. The effect of rising oil prices on remittances could
be explained, on the one hand, by the decline in purchasing power in oil-importing
countries, which leads migrants to send more to their countries of origin for al-
truistic reasons and assisting their relatives. On the other hand, this effect might be
due to the increase in the volume of remittances from oil-exporting countries, for
example, the Gulf countries. Those two hypothesizes will be tested in this sub-
section. The effect of oil price changes on remittances can come from two sides.
The first has an effect in the country of origin and the second in the host countries.

Table 2
COINTEGRATION TEST RESULTS

Sample period: 2004:03 - 2010:12 (T = 82)


Cointegration Rank Eigenvalue Test Trace Test Lmax

38.602 27.560
0 0.28545 p-value: 0.0033 p-value: 0.0041
11.042 7.297
At most 1 0.08514 p-value: 0.2123 p-value: 0.4634
300 THE JOURNAL OF ENERGY AND DEVELOPMENT

Table 3
a
RESULTS FROM THE VECTOR ERROR-CORRECTION MODEL (VECM) ESTIMATES

Cointegrating Eq: CointEq1

LOGR(-1) 1.000000
–0.827867
PRICE(-1) [–8.25419]
–6.702253
Q(-1) [–2.29540]
C 28.22619
Error Correction: D(LOGR)
–0.348748
CointEq1 [–2.50804]
0.020338
D(LOGR(-1)) [ 0.14941]
–0.236972
D(LOGR(-2)) [–1.92584]
0.263802
D(PRICE(-1)) [ 1.27835]
–0.067671
D(PRICE(-2)) [–0.32121]
–0.760682
D(Q(-1)) [–0.27394]
–2.005609
D(Q(-2)) [–0.73466]
0.003966
C [ 0.21830]
Adj. R-squared 0.190941
Sum sq. resids 1.908909
S.E. equation 0.161708
F-statistic 3.697193
Log likelihood 36.85663
Akaike information criterion (AIC) –0.712509
Schwarz criterion (SC) –0.476021
Mean dependent 0.005783
S.D. dependent 0.179780

a
t-statistics are in brackets. R = remittances; PRICE = oil prices; Q = nominal effective exchange
rate; and C = constant.
Source: Authors’ calculations.
MOROCCO: OIL PRICES AND REMITTANCES 301

Table 4
REMITTANCES-SENDING COUNTRIES TO MOROCCO, 2017
(in millions of U.S. dollars)

Country Morocco Percentage Cumulative

France $2,292.01811 30.69% 30.69%


Spain $1,848.28704 24.75% 55.44%
Italy $1,026.68421 13.75% 69.19%
Belgium $507.89475 6.80% 75.99%
Germany $316.76942 4.24% 80.23%

Source: World Bank, “Migration and Remittances,” available at www.worldbank.org/prospects/


migrationandremittances.

In the country of origin, price increases could have an effect on the purchasing
power of migrants’ families. In the host country that exports oil, an increase in oil
prices can lead to an improvement in migrants’ incomes so they can send more
remittances. In the host country, if the migrant is in an oil-exporting country,
a price increase will have a positive effect on the economic situation of that
country, thereby generating an increase in migrant income.

Table 5
IMPACT OF OIL PRICE ON THE CONSUMER PRICE INDEX (CPI) AND CPI ON
a
REMITTANCES

Dependent Variable
(1) log(Remittances) (2) log(CPI)

3.329***
log(CPI) (0.472)
0.087***
log(Oil Price) (0.013)
–8.998*** 4.185***
Constant (2.147) (0.055)
Observations 84 84
2
R 0.378 0.350
2
Adjusted R 0.370 0.342
Residual Standard Error (df = 82) 0.197 0.037
F-Statistic (df = 1:82) 49.757*** 44.200***

a
* = p < 0.1; ** = p < 0.05; and *** = p < 0.01.
Source: Authors’ calculations.
302 THE JOURNAL OF ENERGY AND DEVELOPMENT

Now, let us look at the specific case of Morocco. Table 4 indicates that 80
percent of remittances to Morocco come from non-oil-exporting countries. The
likelihood that the effect of changes in oil prices on remittances will pass to host
countries is low. Next, the effect of oil price on the consumer price index (CPI)
will be estimated.
Table 5 shows that an oil price increase has a positive effect on prices in
Morocco. However, remittances are responding positively to the increase in the
consumer price index. This last result corresponds to the theory of migrants’ al-
truism that stipulates an increase in remittances following economic difficulties in
the country of origin. The CPI in the country of origin is the main transmission
channel between oil prices and remittances. Higher oil prices will slow economic
recovery by decreasing the real income of migrants’ families and firms.

Conclusion

This article contributes to the recent debate on macroeconomic consequences


of oil price variations. It investigates the empirical relationship between the crude
oil price and remittances in Morocco during the period from 2004 to 2010 using
static and dynamic regressions. The empirical investigations show that migrants’
remittances react positively to increases in oil price. In this way, this article
contributes to the existing literature on the macroeconomic determinants of re-
mittances by using an external shock such as crude oil price.
There is a cointegration relationship between the crude oil price and re-
mittances; however, the empirical investigations did not find a short-run re-
lationship between remittances and oil price. These results suggest that migrants’
remittances can alleviate the budgetary constraints of households left behind in the
home country caused by rising oil prices. The governments of the labor-exporting
and labor-importing countries can use incentive policy for migrants to further
transfer funds during periods of rising oil prices. This not only has implications for
Morocco, where remittances represent an important part of the economy, but also
for top recipient countries for remittances worldwide such as India, China, the
Philippines, Mexico, Nigeria, Pakistan, Egypt, Vietnam, and Bangladesh.
NOTES
1
F. Makhlouf, “Transferts De Fonds Vers Le Maroc, Enjeux, Comportement et Impacts”
(Doctorate thesis, Université de Pau et des Pays de l’Adour, France, 2013).
2
A. P. Gbatu, Z. Wang, P. K. Wesseh, and I. Tutdel, “The Impacts of Oil Price Shocks on Small
Oil-Importing Economies: Time Series Evidence for Liberia,” Energy, vol. 139 (2017), pp. 975–90.
3
D. Barne, “Is There a Link between Oil Prices and Remittances?” World Bank Voices, May 11,
2016, and G. Naufal and A. Termos, “The Responsiveness of Remittances to the Oil Price: The
MOROCCO: OIL PRICES AND REMITTANCES 303

Case of the GCC,” IZA Discussion Paper no. 4277, IZA Institute of Labor Economics, Bonn,
Germany, 2009.
4
O. Stark and R. Lucas, “Migration, Remittances, and the Family,” Economic Development and
Cultural Change, vol. 36, no. 3 (1998), pp. 465–81.
5
R. J. Singh, M. Haacker, and K.-W. Lee, “Determinants and Macroeconomic Impact of Re-
mittances to Sub-Saharan Africa,” International Monetary Fund (IMF) Working Paper 09/216, IMF,
Washington, D.C., 2009.
6
R. Lucas and O. Stark, “Motivations to Remit: Evidence from Botswana,” Journal of Political
Economy, vol. 93, no. 5 (1985), pp. 901–18.
7
P. Karpestam and F. N. Andersson, “International Remittances – A Proposal How to Test
Hypotheses about Determinants of Remittances with Macroeconomic Time Series,” Working Paper
2011:1, Lund University, Department of Economics, Lund, Sweden, 2011.
8
C. Vargas-Silva and P. Huang, “Macroeconomic Determinants of Workers’ Remittances: Host
versus Home Country’s Economic Conditions,” Journal of International Trade & Economic De-
velopment, vol. 15, no. 1 (2006), pp. 81–99.
9
I. Grabel, “The Political Economy of Remittances: What Do We Know? What Do We Need to
Know?” Political Economy Research Institute (PERI) Working Paper series no. 184, PERI, Uni-
versity of Massachusetts Amherst, Amherst, Massachusetts, 2008.
10
I. Sirkeci, J. H. Cohen, and D. Ratha, Migration and Remittances during the Global Financial
Crisis and Beyond (Washington, D.C.: World Bank, 2012).
11
D. Barro, T. Benninger, A. Bitang, I. Tiati, S. Gruhl. O. Koukoui and A. Mihai, Rapport sur
les migrations: Migrations internationales – une option de sortie par défaut? (Paris: Atelier in-
ternational de Science-Po, Banque Mondiale, 2007).
12
M. I. T. El-Sakka and R. McNabb, “The Macroeconomic Determinants of Emigrant Re-
mittances,” World Development, vol. 27, no. 8 (1999), pp. 1493–502.
13
R. Chami, S. Jahjah, and C. Fullenkamp, “Are Immigrant Remittance Flows a Source of
Capital for Development?” International Monetary Fund (IMF) Working Papers 03/189, IMF,
Washington, D.C., 2003.
14
B. L. Lowell and R. De La Grazza, The Developmental Role of Remittances in U.S. Latino
Communities and in Latin American Countries (Washington, D.C.: Inter-American Dialogue &
Tomás Rivera Policy Institute, 2000).
15
R. Aggarwal and A. W. Horowitz, “Are International Remittances Altruism or Insurance?
Evidence from Guyana Using Multiple-Migrant Households,” World Development, vol. 30, no. 11
(2002), pp. 2033–044, and K. Osaki, “Migrant Remittances in Thailand: Economic Necessity or
Social Norm,” Journal of Population Research, vol. 20, no. 2 (2003), pp. 203–22.
16
F. Arestoff, M. Kuhn, and M. El Mouhoud, “Migration and Remittances in South Africa: The
Role of Political Factors,” Open Access publications from Université Paris-Dauphine, France,
304 THE JOURNAL OF ENERGY AND DEVELOPMENT

2010, and A. O’Mahony, “Political Investment: Remittances and Elections,” Working Paper,
University of British Columbia, Canada, 2012.
17
I. A. Elbadawi and R. Rocha, Determinants of Expatriate Workers’ Remittances in North
Africa and Europe, Working Paper WPS 1038, Country Economics Department, The World Bank,
Washington, D.C., 1992, and J. Edelbloude, C. Fontan Sers, and F. Makhlouf, “Do Remittances
Respond to Revolutions? The Evidence from Tunisia,” Research in International Business and
Finance, vol. 42, issue C (2017), pp. 94–101.
18
L. Miotti, E. Mouhoud, and J. Oudinet, “Determinants and Uses of Remittances to Southern
and Eastern Mediterranean Countries: Insights from a New Survey,” Development Working Papers
288, Centro Studi Luca d’Agliano, University of Milano, Milan, Italy, revised April 30, 2010.
19
F.-P. Chiu, C.-S. Hsu, A. Ho, and C.-C. Chen, “Modeling the Price Relationships between
Crude Oil, Energy Crops and Biofuels,” Energy, vol. 109, issue C (2006), pp. 845–57.
20
J. Edelbloude et al., op. cit.; F. Farid, “The Impact of Exchange Rate Policy on Remittances in
Morocco: A Threshold VAR Analysis,” Economics Bulletin, vol. 34, no. 4 (2014), pp. 2351–360;
and F. Makhlouf, “Transferts De Fonds Vers Le Maroc, Enjeux, Comportement et Impacts.”
21
F. Makhlouf, “Transferts De Fonds Vers Le Maroc, Enjeux, Comportement et Impacts.”
22
J. Edelbloude et al., op. cit.
23
C. Vargas-Silva, “The Tale of Three Amigos, Remittances, Exchange Rate and Money De-
mand in Mexico” Review of Development Economics, vol. 13, no. 1 (2009), pp. 1–14; R. H. Adams,
Jr., “The Determinants of International Remittances in Developing Countries,” World Development,
vol. 37, no. 1 (2009), pp. 93–103; T. P. Lianos, “Factors Determining Migrant Remittances: The
Case of Greece,” International Migration Review, vol. 31, no. 1 (1997), pp. 72–87; and A. M.
Alper, “Macroeconomic Determining Factors of Workers’ Remittances: Turkey Example” (Un-
published expertise thesis, CBRT, General Directory of Remittances, Ankara, Turkey, 2005) (in
Turkish).
24
Y. Bourdet and H. Falck, “Emigrants’ Remittances and Dutch Disease in Cape Verde,” In-
ternational Economic Journal, vol. 20, no. 3 (2006) pp. 267–84; P. Acosta, E. Lartey, and F.
Mandelman, “Remittances and the Dutch Disease,” Journal of International Economics, vol. 79,
no. 1 (2009), pp. 102–16; F. Makhlouf and M. Mughal, “Labour Market Effects of Foreign and
Internal Remittances—Case Study of Pakistan,” International Review of Applied Economics, vol.
27, no. 6 (2013), pp.798–821; and K. Chnaina and F. Makhlouf, “Impact des Transferts de Fonds
sur le Taux de Change Réel Effectif en Tunisie,” African Development Review, vol. 27, no. 2
(2015), pp. 145–60.
25
R. Lucas and O. Stark, op. cit.
MOROCCO: OIL PRICES AND REMITTANCES 305

APPENDIX

Table 1
a
SUMMARY STATISTICS

Statistic N Mean St. Dev. Min. Max.

R (monthly remittances inflows


in millions of U.S. $) 84 482.781 122.402 282.300 897.700
OP (oil price) 84 68.128 21.682 34.310 133.880
Q (nominal effective exchange rate) 84 100.795 1.127 99.330 106.750
Int (interest rates on deposits) 84 2.996 0.496 2.250 4.310
In (inflation) 84 0.002 0.007 –0.016 0.022

a
N = number of observations; St. Dev. = standard deviation; Min. = minimum; and Max. =
maximum.
Source: Authors’ calculations.
Table 2
a
ORDINARY LEAST SQUARES (OLS) REGRESSION RESULTS

Dependent Variable: Remittances — Log(r)


(1) (2) (3) (4)

0.579*** 0.628*** 0.630*** 0.510***


Log(OP) (0.061) (0.060) (0.061) (0.066)
5.077*** 5.055*** 4.065**
Log(Q) (1.687) (1.697) (1.614)
–1.021
In (2.446)
0.396***
Log(Int) (0.116)
3.731*** –19.890** –19.797** –15.164**
Constant (0.254) (7.854) (7.898) (7.513)
Observations 84 84 84 84
2
R 0.526 0.574 0.574 0.628
2
Adjusted R 0.520 0.563 0.558 0.614
Residual Standard Error 0.172 (df = 82) 0.164 (df = 81) 0.165 (df = 80) 0.154 (df = 80)
90.946*** 54.465*** 35.998*** 44.966***
F-Statistic (df = 1; 82) (df = 2; 81) (df = 3; 80) (df = 3; 80)

a
* = p < 0.1; ** = p < 0.05; and *** = p < 0.01. OP = oil prices; Q = nominal effective exchange
rate; In = inflation, and Int = interest rate.
Source: Authors’ calculations.
306 THE JOURNAL OF ENERGY AND DEVELOPMENT

Appendix (continued)

Table 3
a
ROBUST LINEAR REGRESSION RESULTS

Dependent Variable: Remittances — Robust Linear Regression


(1) (2) (3) (4)

0.572*** 0.623*** 0.625*** 0.485***


Log(OP) (0.065) (0.060) (0.062) (0.067)
5.624*** 5.608*** 4.089**
Log(Q) (1.695) (1.744) (1.622)
–1.134
In (2.514)
0.439***
Log(Int) (0.117)
3.751*** –22.401*** –22.337*** –15.227**
Constant (0.272) (7.888) (8.118) (7.552)
Observations 84 84 84 84
0.157 0.175 0.172 0.137
Residual Standard Error (df = 82) (df = 81) (df = 80) (df = 80)

Table 4
a
INSTRUMENTAL VARIABLES (IV) REGRESSION RESULTS

Dependent Variable: Remittances — IV Regression


(1) (2) (3)

0.769*** 0.769*** 0.643***


Log(OP) (0.102) (0.103) (0.112)
20.026*** 19.946*** 14.222**
Log(Q) (6.565) (6.609) (6.222)
–0.361
In (3.437)
0.262
Log(Int) (0.162)
–89.440*** –89.072*** –62.426**
Constant (30.546) (30.749) (28.955)
Observations 84 84 84
2
R 0.160 0.165 0.443
2
Adjusted R 0.140 0.133 0.423
0.230 0.231 0.188
Residual Standard Error (df = 81) (df = 80) (df = 80)

a
* = p < 0.1; ** = p < 0.05; and *** = p < 0.01. OP = oil prices; Q = nominal effective exchange
rate; In = inflation, and Int = interest rate.
Source: Authors’ calculations.
MOROCCO: OIL PRICES AND REMITTANCES 307

Appendix (continued)

Table 5
a
DYNAMIC REGRESSION RESULTS

Dependent Variable: Remittances — Dynamic Regressions


(1) (2) (3) (4)

0.474*** 0.430*** 0.459*** 0.369***


L(log(R),1) (0.099) (0.098) (0.100) (0.098)
0.475** 0.501*** 0.491*** 0.474***
Log(OP) (0.181) (0.176) (0.175) (0.170)
–0.165 –0.129 –0.131 –0.153
L(log(OP),1) (0.182) (0.177) (0.176) (0.171)
3.814** 3.672** 3.245**
Log(Q) (1.562) (1.557) (1.526)
–3.110
In (2.258)
0.288**
Log(Int) (0.113)
1.942*** –15.639** –15.108** –12.739*
Constant (0.434) (7.215) (7.184) (7.064)
Observations 83 83 83 83
2
R 0.630 0.656 0.665 0.683
2
Adjusted R 0.616 0.639 0.643 0.663
0.154 0.149 0.148 0.144
Residual Standard Error (df = 79) (df = 78) (df = 77) (df = 77)
48.848*** 37.236*** 30.511*** 33.201***
F-Statistic (df = 3; 79) (df = 4; 78) (df = 5; 77) (df = 5; 77)

a
* = p < 0.1; ** = p < 0.05; and *** = p < 0.01. OP = oil prices; Q = nominal effective exchange
rate; In = inflation, and Int = interest rate.
Source: Authors’ calculations.
308 THE JOURNAL OF ENERGY AND DEVELOPMENT

Appendix (continued)

Figure 1A
VARIABLES USED IN EMPIRICAL INVESTIGATIONS: MONTHLY REMITTANCES
INFLOWS, JANUARY 2004 – DECEMBER 2010
(in millions of U.S. $)

Figure 1B
VARIABLES USED IN EMPIRICAL INVESTIGATIONS: NOMINAL EFFECTIVE
EXCHANGE RATE, JANUARY 2004 – DECEMBER 2010
MOROCCO: OIL PRICES AND REMITTANCES 309

Appendix (continued)
Figure 1C
VARIABLES USED IN EMPIRICAL INVESTIGATIONS: CRUDE OIL PRICES,
JANUARY 2004 – DECEMBER 2010
(in U.S. $ per barrel)

Figure 1D
VARIABLES USED IN EMPIRICAL INVESTIGATIONS: INTEREST RATES,
JANUARY 2004 – DECEMBER 2010
310 THE JOURNAL OF ENERGY AND DEVELOPMENT

Appendix (continued)
Figure 1E
VARIABLES USED IN EMPIRICAL INVESTIGATIONS: INFLATION,
JANUARY 2004 – DECEMBER 2010

Figure 2
SCATTERPLOT OF REMITTANCES AND OIL PRICES, JANUARY 2004 – DECEMBER 2010

You might also like