Workers’ Remittances and the Equilibrium Real Exchange Rate Theory and Evidence
This paper investigates the impact of workers’ remittances on equilibrium real exchange rates (ERER) in recipient economies. Using a small open economy model, it shows that standard "Dutch Disease" results of appreciation are substantially weakened or even overturned depending on: degree o...
Main Author: | |
---|---|
Other Authors: | , , |
Format: | eBook |
Language: | English |
Published: |
Washington, D.C.
International Monetary Fund
2010
|
Series: | IMF Working Papers
|
Subjects: | |
Online Access: | |
Collection: | International Monetary Fund - Collection details see MPG.ReNa |
Summary: | This paper investigates the impact of workers’ remittances on equilibrium real exchange rates (ERER) in recipient economies. Using a small open economy model, it shows that standard "Dutch Disease" results of appreciation are substantially weakened or even overturned depending on: degree of openness; factor mobility between domestic sectors; counter cyclicality of remittances; the share of consumption in tradables; and the sensitivity of a country’s risk premium to remittance flows. Panel cointegration techniques on a large set of countries provide support for these analytical results, and show that ERER appreciation in response to sustained remittance flows tends to be quantitatively small |
---|---|
Physical Description: | 42 pages |
ISBN: | 9781455210947 |