Abstract

This study investigates the impact ofremittance on personal consumption expenditure in Nigeria (1981 - 2018) using the ordinary least square method -which incorporates endogenity in its estimation, the unit root test was carried outfor each ofthe variables using the ADF (Augmented Dickey Fuller) which shows that are variables i.e., PCE, CPI, FDI, REM, EXRT are stationary at 1st difference. The cointegraton was also conducted to determine if there exists a long run relationship among variables. Finding from the study shows that a percentage increase in consumer price index will lead to about 8.89% increase in the personal consumption expenditure holding other variables constant. This proves that CPI has a positive impact on personal consumption spending. The coefficient ofremittance is 0.009351. This suggests that a percentage increase in remittance will lead to a percentage increase in the personal consumption expenditure by 0.93% holding other variables constant. This proves that remittance has a positive impact on personal consumption spending. Therefore this suggests that personal consumption spending are expected to rise given rise in remittance. The coefficient ofexchange rate is 0.010361. This suggests that a percentage increase in exchange rate officially will lead to a percentage increase in the personal consumption spending by 1.03% holding other variables constant. This proves that exchange rate has a positive impact on personal consumption spending. The coefficient of foreign direct investment is 0.962696. This suggests that a percentage increase in FDI will lead to a percentage increase in the personal consumption spending by 96.3%> holding other variables constant. This proves that FDI has a positive impact on personal consumption spending. Thus, not all the variables are statistically significant despite the fact, some are still significant. The study recommends among others that the Governments of Nigeria shouldformulate and implement monetary policies that will streamline the process of receivingforeign remittances, especially between the two countries, to make it easier, faster and efficient, there should be a close-up monitoring ofinternationalfinancial transfers to reduce the cases of fraud and financial malpractices, governments of Nigeria should also increase expenditure on welfare services like pipe-borne water, education and health care. This will reduce the use offoreign remittance by households to provide these welfare services andprompt them to save or invest theirforeign remittance receipts.