Remittances, Exchange Rate Regimes, and the Dutch Disease: A Panel Data Analysis

Mandelman, Federico S.; Acosta, Pablo

doi:10.2139/ssrn.1109206

Cited by 81 publications

(83 citation statements)

References 14 publications

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“…Obviously, the outcome of an export boom can differ 24 Examples of the first group include Arezki and Ismail (2010), Rajan andSubramanian (2011), andLartey et al (2012). For the second type of studies, see Richards (1994), Oomes and Kalcheva (2007) and Algieri (2011).…”

Section: Myth 8: Dutch Disease Is Synonymous With Resource Cursementioning

confidence: 99%

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Demystifying Dutch Disease

Kojo

2015

J. Intl Econ. Comm. Policy.

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This paper examines the theory of Dutch disease and its implications for practical policy questions. Dutch disease is a term that is well-known to economists and development practitioners. But it is also a concept that is often conflated with "resource curse" and misinterpreted as a "disease" that necessarily causes adverse impacts on the economy. The paper points out that many of the seemingly well-established arguments in this field are not necessarily grounded in theory or empirical evidence. Great care is needed in diagnosing Dutch disease and formulating policy prescriptions based on the theoretical framework, given the restrictive assumptions that may not be fully applicable and the limited relevance to today's inextricably intertwined trade flows.

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Section: Myth 8: Dutch Disease Is Synonymous With Resource Cursementioning

confidence: 99%

“…See for exampleFielding and Gibson (2012), Amuedo-Dorantes and Pozo(2004),Kang et al (2012),Lartey et al (2012),Martins (2013) andIMF (2005). A good literature review can be found inMagud and Sosa (2013), andNaceur et al (2012) Rajan and Subramanian (2011).…”

mentioning

confidence: 99%

Demystifying Dutch Disease

Kojo

2015

J. Intl Econ. Comm. Policy.

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“…For instance, Lartey et al (2008) study the existence of DD effects stemming from remittances, trying to capture both spending and resource movement effects. To this end, they run a set of regressions using the ratio of tradable to non-tradable output as the dependent variable, in addition to the standard regressions using the real exchange rate.…”

Section: Applications and Empirical Studiesmentioning

confidence: 99%

When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth

Magud

Sosa

2013

J. Intl Econ. Comm. Policy.

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We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.

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“…Generally, they affect the foreign assets stock and the liabilities of the recipient country, which may lead to changes in the real exchange rate. While Acosta et al (2009) and Lartey et al (2012) find that countries with a large amount of remittance inflows can expect lower economic growth due to a real appreciation of exchange rate that potentially lower export competitiveness. Inflows of capital will induce higher demand in the tradable and non-tradable sectors, which lead to a higher relative price of non-tradable and to real exchange rate appreciation.…”

Section: Literature Surveymentioning

confidence: 99%

“…The real effective exchange rate, as a standard measure of foreign exchange rates, is significantly influenced by both FDI and remittance inflows in a positive manner (Corden, 1994;Lartey et al, 2012).…”

Section: Foreign Exchange Rate (Reer)mentioning

confidence: 99%

Impacts of FDI and Remittance Inflows in Developing Asia: A Comparative Dynamic Panel Study

Sinha

Tirtosuharto

Sengupta

2019

J of App Econs and Policy

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The paper explores the macroeconomic impacts of foreign direct investment (FDI) and remittance inflows in developing Asia. Asian developing economies are identified as the highest receiver of remittances and the region has also been consistently performing well in receiving of FDI inflows. As an external source of capital formation, inflows of FDI and remittances affect foreign exchange rates and output. This study provides empirical evidence on the impact of FDI and remittances on real effective exchange rates and GDP in Asian developing countries using data over the period of 1981-2015. Dynamic panel GMM technique is employed to overcome the endogeneity issue. Findings imply that both inflows of FDI and remittances have positive and significant impacts on exchange rates and GDP in developing Asia. Hence, remittances carry greater influence and significant impacts due to relatively stable inflows.

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Remittances, Exchange Rate Regimes, and the Dutch Disease: A Panel Data Analysis

Cited by 81 publications

References 14 publications

Demystifying Dutch Disease

Demystifying Dutch Disease

When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth

Impacts of FDI and Remittance Inflows in Developing Asia: A Comparative Dynamic Panel Study

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