EconPapers    
Economics at your fingertips  
 

Monetary and exchange rate policy under remittance fluctuations

Federico Mandelman ()

Journal of Development Economics, 2013, vol. 102, issue C, 128-147

Abstract: Using data for the Philippines, I develop and estimate a heterogeneous agent model to analyze the role of monetary policy in a small open economy subject to sizable remittance fluctuations. I include “rule-of-thumb” households with no access to financial markets and test whether remittances are countercyclical and serve as an insurance mechanism against macroeconomic shocks. When evaluating the welfare implications of alternative monetary rules, I consider both an anticipated large secular increase in the trend growth of remittances and random cyclical fluctuations around this trend. In a purely deterministic framework, a nominal fixed exchange rate regime avoids a rapid real appreciation and performs better for recipient households facing an increasing trend for remittances. A flexible floating regime is preferred when unanticipated shocks driving the business cycle are also part of the picture.

Keywords: Remittances; Small open economy; Exchange rate regimes (search for similar items in EconPapers)
JEL-codes: F40 F41 O10 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304387812000107
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Monetary and exchange rate policy under remittance fluctuations (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:102:y:2013:i:c:p:128-147

DOI: 10.1016/j.jdeveco.2012.02.006

Access Statistics for this article

Journal of Development Economics is currently edited by M. R. Rosenzweig

More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:deveco:v:102:y:2013:i:c:p:128-147