Remittances and the real exchange rate

Humberto Lopez, Luis Molina Sánchez and Maurizio Bussolo

No 4213, Policy Research Working Paper Series from The World Bank

Abstract: Existing empirical evidence indicates that remittances have a positive impact on a good number of development indicators of recipient countries. Yet when flows are too large relative to the size of the recipient economies, as those observed in a number of Latin American countries, they may also bring a number of undesired problems. Among those probably the most feared in this context is the Dutch Disease. This paper explores the empirical evidence regarding the impact of remittances on the real exchange rate. The findings suggest that remittances indeed appear to lead to a significant real exchange rate appreciation. The paper also explores policy options that may somewhat offset the observed effect.

Keywords: Economic Stabilization; Macroeconomic Management; Economic Theory&Research; Remittances; Achieving Shared Growth (search for similar items in EconPapers)
Date: 2007-04-01
New Economics Papers: this item is included in nep-cba, nep-dev, nep-ifn and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (68)

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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4213

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