Remittances, Dutch Disease, and Competitiveness: A Bayesian Analysis

Makhlouf, Farid; Mughal, Mazhar

doi:10.35866/caujed.2013.38.2.003

Cited by 44 publications

(43 citation statements)

References 49 publications

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“…Apart from developing a general equilibrium model for El Salvador to examine whether increase in remittances causes the Dutch disease, Acosta et al () use Bayesian methods and conclude that remittances lead to the Dutch disease. Extending the work of Acosta et al, Makhlouf and Mughal () find diverse evidence for the effects of both spending and resource movements in Pakistan, North America and Europe. They conclude that while remittances from the Persian Gulf cause the Dutch disease in Pakistan, those from North America and Europe do not.…”

Section: Theoretical Framework and Empirical Literature Reviewmentioning

confidence: 82%

“…The attempt to answer this question has produced a number of controversial results (e.g. Amuedo‐Dorantes and Pozo, ; Lopez et al ., ; Acosta et al ., ; Sy and Tabarraei, ; Combes et al ., ; Fayad, ; Makhlouf and Mughal, ; Roy and Rahman, ). Chami et al () and Loser et al (), based on general equilibrium analysis, argue that the optimal monetary policy effects of remittances are not the same in all countries.…”

Section: Theoretical Framework and Empirical Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Ojapinwa¹,

Nwokoma²

2018

African Development Review

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Based on the Salter-Swan-Corden-Dornbusch framework, which argues that capital inflows may appreciate the official exchange rate by aggravating the effects of any previously existing domestic distortions, this paper examines the claim that workers' remittances cause the Dutch disease in sub-Saharan Africa (SSA). Specifically, the study investigates whether remittances cause financial overheating and spending effects. The study adopts the dynamic panel instrumental variable system generalized method of moment (IVSGMM). This study finds that although workers' remittances cause financial overheating, they neither increase general spending nor appreciate the real exchange rate, thereby implying that workers' remittances do not cause the Dutch disease in SSA from 1996 to 2013. These findings suggest that governments should establish diaspora incentive schemes so as to encourage remitters and recipient households' to invest productively. Government efforts should be integral at improving the financial education for remitters and the recipient households so as to avoiding channelling overheating effects to spending effects and to the Dutch disease.

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Section: Theoretical Framework and Empirical Literature Reviewmentioning

confidence: 82%

Section: Theoretical Framework and Empirical Literature Reviewmentioning

confidence: 99%

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Ojapinwa¹,

Nwokoma²

2018

African Development Review

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“…Such ODA assistance was reduced after the recent financial crisis which reduced income growth rate by about 7 % between 2007 and 2009. The impact of remittances to poorer countries is envisioned to have negative effects on the receiving countries according to Makhlouf and Mughal (2013). Remittances can hurt competitiveness popularly known as Dutch disease.…”

Section: Discussionmentioning

confidence: 99%

Comparing Africa, Asia and Latin America/Caribbean countries using per capita GDP, remittances, openness, capital/labor ratios and freedom

Collins

Nissan

2014

J Econ Finan

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The focus of this paper is to evaluate similarities and differences between and within three regions: Africa, Asia, and Latin America/Caribbean. The five variables used (per capita GDP, remittances, openness, capital/labor ratio and freedom) broadly classify economic growth in these regions. For each of the five variables the null hypothesis is that the means of the three regions are equal. One-way analysis of variances is the tool of choice. Furthermore, the full samples are employed to test equality of the means between the three regions and all regions. The results show substantial gaps between the groups as well as factors under consideration.

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“…7 Under this condition, remittances cause an appreciation of the real exchange rate, and loss of competitiveness of Pakistan's exports sector and at the same time increase share of the non-tradable sector in the economy. Makhlouf andMughal (2011), Javaid (2009) and Ahmed (2009) find empirical support for the Dutch Disease hypothesis for Pakistan.…”

Section: Implications For Macro-economic Strategiesmentioning

confidence: 99%

Macro-economic Policies and Energy Security—Implications for a Chronic Energy Deficit Country

Mangla¹,

Uppal

2014

PDR

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The paper assesses the energy sector’s foreign exchange requirements for meeting energy consumption and for capital expenditures, and identifies its implications for the country’s macroeconomic policy and management. We develop a conceptual model for projecting the energy sector’s long-term requirements for foreign exchange. The model indicates that the country’s chronic dependence on oil imports is likely to expose the economy to high and volatile oil prices. A fundamental issue for Pakistan is how the energy projects requiring large inflows of foreign capital and technology will be financed. The main implication of our analysis is that there will be continuing pressure on the country’s foreign exchange resources. The demand for foreign exchange by the year 2024-25 is projected to be US$ 20-21 billion without the FDI in new power generation. However, when we include the requirements of foreign exchange for capital expenditure, the total FX requirements are in the range of US$ 23- 24 billion. An implication of the country’s chronic energy deficiency is that the macroeconomic policies, particularly the foreign exchange rate policy, need to be redefined to reflect the projected demands on hard currencies and their expected scarcity value. It is likely that Pakistan will remain dependent on foreign imports to meet its energy requirements for a long time and will need to generate commensurate foreign exchange resources to ensure longterm energy security. JEL classification: E66, F37, Q43 Keywords: Macroeconomic Policy, Exchange Rate Policy, Energy Security

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Remittances, Dutch Disease, and Competitiveness: A Bayesian Analysis

Cited by 44 publications

References 49 publications

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Comparing Africa, Asia and Latin America/Caribbean countries using per capita GDP, remittances, openness, capital/labor ratios and freedom

Macro-economic Policies and Energy Security—Implications for a Chronic Energy Deficit Country

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