Remittances and the Real Exchange Rate

By Humberto López, Luis Molina, M. Bussolo. 2007

168 citations recorded by the source corpus.

Existing empirical evidence indicates that remittances have a positive impact on a good number of development indicators of recipient countries. Yet when flows are too large relative to the size of the recipient economies, as those observed in a number of Latin American countries, they may also bring a number of undesired problems. Among those probably the most feared in this context is the Dutch Disease. This paper explores the empirical evidence regarding the impact of remittances on the real exchange rate. The findings suggest that remittances indeed appear to lead to a significant real exchange rate appreciation. The paper also explores policy options that may somewhat offset the observed effect.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/5c7b54ace1917c2ded27e95521fb650e55e9b6b9

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Citations in the corpus

Evaluating the Economic Impact of International Remittances On Developing Countries Using Household Surveys: A Literature Review (2011, methodology): “While the previous studies evaluate the effects of migration and remittances on health, Lopez-Cordova (2005) broadens the analysis by using municipal-level data from Mexico to examine the impact of migration and remittances on health and education. Using an instrumental variables approach that emplo”
Financial development, remittances, and real exchange rate appreciation (2009, methodology): “If such funds were otherwise channeled through investment, the real exchange rate appreciation would attenuate or even disappear (Acosta, Lartey, and Mandelman 2007; Lopez, Molina, and Bussolo 2007).”
Mobility and Human Development (2009, background): “It has also been argued that remittances can contribute to undesirable currency appreciation (Dutch disease) (Lopez, Molina, and Bussolo 2007), create disincentives for domestic savings and support private consumption of (imported) goods instead of financing investment, which can potentially hamper…”
Remittances, Exchange Rate Regimes, and the Dutch Disease: A Panel Data Analysis (2012, unknown): “…that rising levels of remittances, as any other massive capital in ow, can appreciate the real exchange rate in recipient economies (Amuedo-Dorantes and Pozo, 2004; López et al, 2007), and therefore generate a resource allocation from the tradable to the nontradable sector (Acosta et al, 2007).”