Migrant Remittances and Exchange Rate Regimes in the Developing World
By D. Singer. American Political Science Review, 2010
179 citations recorded by the source corpus.
This article argues that the international financial consequences of immigration exert a substantial influence on the choice of exchange rate regimes in the developing world. Over the past two decades, migrant remittances have emerged as a significant source of external finance for developing countries, often exceeding conventional sources of capital such as foreign direct investment and bank lending. Remittances are unlike nearly all other capital flows in that they are stable and move countercyclically relative to the recipient country's economy. As a result, they mitigate the costs of forgone domestic monetary policy autonomy and also serve as an international risk-sharing mechanism for developing countries. The observable implication of these arguments is that remittances increase the likelihood that policy makers adopt fixed exchange rates. An analysis of data on de facto exchange rate regimes and a newly available data set on remittances for up to 74 developing countries from 1982 to 2006 provides strong support for these arguments. The results are robust to instrumental variable analysis and the inclusion of multiple economic and political variables.
Subfields: Economics and Econometrics, Finance, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/e32fa189ba53277df0d8ce6a1a4486dd12a08c8e
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Citations in the corpus
- The Perils of Unearned Foreign Income: Aid, Remittances, and Government Survival (2012, methodology): “…less politically accountable to their populations, aid can have adverse effects on human development (Knack 2003) and is likely to be wasted on nonproductive activities that will help the government stay in power (e.g., Bueno de Mesquita and Smith 2009, 2010; Kono and Montinola 2009; Smith 2008).”