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Workers’ Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence

Adolfo Barajas, Ralph Chami (), Dalia Hakura and Peter Montiel

Economía Journal, 2011, vol. Volume 11 Number 2, issue Spring 2011, 45-99

Abstract: "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, and countercyclicality 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."

Keywords: Worker´s remittances; equilibrium real exchange rate; low-income countries (search for similar items in EconPapers)
JEL-codes: F3 F31 F32 (search for similar items in EconPapers)
Date: 2011
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Working Paper: Workers’ Remittances and the Equilibrium Real Exchange Rate; Theory and Evidence (2010) Downloads
Working Paper: Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence (2010) Downloads
Working Paper: Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence (2010) Downloads
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