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

Ralph Chami, Adolfo Barajas, Peter Montiel and Dalia Hakura

No 2010/287, IMF Working Papers from International Monetary Fund

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; counter cyclicality 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: WP; remittance flow; remittance inflow; remittance receipt; workers' remittance; traded goods (search for similar items in EconPapers)
Pages: 42
Date: 2010-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=24495 (application/pdf)

Related works:
Journal Article: Workers’ Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence (2011)
Working Paper: Workers' remittances and the equilibrium real exchange rate: theory and evidence (2011)
Working Paper: Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence (2010)
Working Paper: Workers' Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence (2010)
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:imf:imfwpa:2010/287

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().