IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v54y2022i36p4131-4153.html
   My bibliography  Save this article

Do remittances cause Dutch Disease? A meta-analytic review

Author

Listed:
  • Amar Iqbal Anwar
  • Colin F. Mang

Abstract

This is the first meta-study to analyze the effect size of remittances on the real exchange rate (RER). Using 426 estimates from 67 studies, we found that remittances appreciate RER; however, the effect size differs across countries. Compared to global estimates, the mean effect of remittances on RER is significantly larger for East Asia and the Pacific, whereas the same nexus is found to be significantly smaller for Latin America and the Caribbean. Furthermore, the synthesized effect of remittances on RER is found to be significantly positive for lower-middle-income countries. Our empirical examination shows that publication selection bias is less likely in the literature. We found a genuine effect of remittances on RER appreciation. This study also provides policy recommendations and presents suggestions for future research in the field.

Suggested Citation

  • Amar Iqbal Anwar & Colin F. Mang, 2022. "Do remittances cause Dutch Disease? A meta-analytic review," Applied Economics, Taylor & Francis Journals, vol. 54(36), pages 4131-4153, August.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:36:p:4131-4153
    DOI: 10.1080/00036846.2021.2022091
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2021.2022091
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2021.2022091?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Khaled Chnaina & Farid Makhlouf, 2015. "Impact des Transferts de Fonds sur le Taux de Change Réel Effectif en Tunisie," African Development Review, African Development Bank, vol. 27(2), pages 145-160, June.
    2. Farid Makhlouf & Mazhar Mughal, 2013. "Remittances, Dutch Disease, And Competitiveness: A Bayesian Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 67-97, June.
    3. Christos Nikas & Student Anastasia Blouchoutzi, 2014. "Emigrants’ Remittances and the “Dutch Disease” in Small Transition Economies: the Case Of Albania and Moldova," Romanian Statistical Review, Romanian Statistical Review, vol. 62(1), pages 45-65, March.
    4. Zigraiova, Diana & Havranek, Tomas & Irsova, Zuzana & Novak, Jiri, 2021. "How puzzling is the forward premium puzzle? A meta-analysis," European Economic Review, Elsevier, vol. 134(C).
    5. Furukawa, Chishio, 2019. "Publication Bias under Aggregation Frictions: Theory, Evidence, and a New Correction Method," EconStor Preprints 194798, ZBW - Leibniz Information Centre for Economics.
    6. Kushneel Avneet Prakash & Anjani Mala, 2016. "Is the Dutch disease effect valid in relation to remittances and the real exchange rate in Fiji?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 571-577, October.
    7. Adolfo Barajas & Ralph Chami & Dalia Hakura & Peter Montiel, 2011. "Workers’ Remittances and the Equilibrium Real Exchange Rate: Theory and Evidence," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 45-99, January.
    8. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    9. Amar I. Anwar & Mazhar Y. Mughal, 2016. "Migrant remittances and fertility," Applied Economics, Taylor & Francis Journals, vol. 48(36), pages 3399-3415, August.
    10. Ripon Roy & Robert Dixon, 2016. "Workers’ remittances and the Dutch disease in South Asian countries," Applied Economics Letters, Taylor & Francis Journals, vol. 23(6), pages 407-410, April.
    11. Ben Naceur, Sami & Bakardzhieva, Damyana & Kamar, Bassem, 2012. "Disaggregated Capital Flows and Developing Countries’ Competitiveness," World Development, Elsevier, vol. 40(2), pages 223-237.
    12. Joof, Foday & Touray, Sheriff, 2021. "The Impact of Remittance Flow on Real Effective Exchange Rate: Empirical Evidence from The Gambia," MPRA Paper 106045, University Library of Munich, Germany.
    13. Cazachevici, Alina & Havranek, Tomas & Horvath, Roman, 2020. "Remittances and economic growth: A meta-analysis," World Development, Elsevier, vol. 134(C).
    14. Theo S. Eicher & Chris Papageorgiou & Adrian E. Raftery, 2011. "Default priors and predictive performance in Bayesian model averaging, with application to growth determinants," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(1), pages 30-55, January/F.
    15. Emmanuel Owusu-Sekyere & Reneé van Eyden & Francis M Kemegue, 2014. "Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(3), September.
    16. Isaiah Andrews & Maximilian Kasy, 2019. "Identification of and Correction for Publication Bias," American Economic Review, American Economic Association, vol. 109(8), pages 2766-2794, August.
    17. John P. A. Ioannidis & T. D. Stanley & Hristos Doucouliagos, 2017. "The Power of Bias in Economics Research," Economic Journal, Royal Economic Society, vol. 127(605), pages 236-265, October.
    18. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, May.
    19. Pablo A. Acosta & Nicole Rae Baerg & Federico S. Mandelman, 2009. "Financial development, remittances, and real exchange rate appreciation," Economic Review, Federal Reserve Bank of Atlanta, vol. 94(1), pages 1-12.
    20. Askarov, Zohid & Doucouliagos, Hristos, 2020. "A meta-analysis of the effects of remittances on household education expenditure," World Development, Elsevier, vol. 129(C).
    21. Musa Essayyad & Mercy Palamuleni & Chandrakala Satyal, 2018. "Remittances and Real Exchange Rates in South Asia: The Case of Nepal," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1226-1238.
    22. Pablo Acosta, 2020. "Intra-Household Labour Allocation, Migration, and Remittances in Rural El Salvador," Journal of Development Studies, Taylor & Francis Journals, vol. 56(5), pages 1030-1047, May.
    23. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Remittances and Real Exchange Rate: Latest Evidence from Cochrane Orcutt Econometric Model," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(2), pages 166-172, June.
    24. Jean Joseph Minviel & Laure Latruffe, 2017. "Effect of public subsidies on farm technical efficiency: a meta-analysis of empirical results," Applied Economics, Taylor & Francis Journals, vol. 49(2), pages 213-226, January.
    25. Zulfiqar Hyder & Adil Mahboob, 2006. "Equilibrium Real Effective Exchange Rate and Exchange Rate Misalignment in Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 2, pages 237-263..
    26. Doucouliagos, Hristos (Chris), 2011. "How large is large? Preliminary and relative guidelines for interpreting partial correlations in economics," Working Papers eco_2011_5, Deakin University, Department of Economics.
    27. Tony Addison & Mina Baliamoune-Lutz, 2017. "Aid, the Real Exchange Rate and Why Policy Matters: The Cases of Morocco and Tunisia," Journal of Development Studies, Taylor & Francis Journals, vol. 53(7), pages 1104-1121, July.
    28. Tomas Havranek & Anna Sokolova, 2020. "Do Consumers Really Follow a Rule of Thumb? Three Thousand Estimates from 144 Studies Say 'Probably Not'," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 97-122, January.
    29. Dominika Ehrenbergerova & Josef Bajzik & Tomas Havranek, 2023. "When Does Monetary Policy Sway House Prices? A Meta-Analysis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(2), pages 538-573, June.
    30. Giuseppe De Luca & Jan R. Magnus, 2011. "Bayesian model averaging and weighted-average least squares: Equivariance, stability, and numerical issues," Stata Journal, StataCorp LP, vol. 11(4), pages 518-544, December.
    31. Augustine C. Osigwe & Kenneth O. Obi, 2016. "Modelling the impacts of remittances on real exchange rate of Nigeria's Naira," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 5(1), pages 1-11.
    32. Mamta B. Chowdhury & Fazle Rabbi, 2014. "Workers' remittances and Dutch Disease in Bangladesh," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(4), pages 455-475, June.
    33. Afolabi O. Adejumo & Sylvanus I. Ikhide, 2019. "The Effects Of Remittance Inflows On Exchange Rates In Nigeria," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(1), pages 1-15, January-M.
    34. Ugur, Mehmet & Churchill, Sefa Awaworyi & Luong, Hoang M., 2020. "What do we know about R&D spillovers and productivity? Meta-analysis evidence on heterogeneity and statistical power," Research Policy, Elsevier, vol. 49(1).
    35. Musa Essayyad & Mercy Palamuleni & Chandrakala Satyal, 2018. "Remittances and Real Exchange Rates in South Asia: The Case of Nepal," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1226-1238, October.
    36. Yves Bourdet & Hans Falck, 2006. "Emigrants' remittances and Dutch Disease in Cape Verde," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 267-284.
    37. Tomas Havranek, Dominik Herman, and Zuzana Irsova, 2018. "Does Daylight Saving Save Electricity? A Meta-Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    38. Muntasir Murshed & Seemran Rashid, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia," The Economics and Finance Letters, Conscientia Beam, vol. 7(1), pages 23-46.
    39. Hamna Ahmed, 2009. "Capital Flows and Real Exchange Rate Overvaluation - A Chronic Ailment: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(Special E), pages 51-86, September.
    40. Artatrana Ratha & Masoud Moghaddam, 2020. "Remittances and the Dutch disease phenomenon: evidence from the bounds error correction modelling and a panel space," Applied Economics, Taylor & Francis Journals, vol. 52(30), pages 3327-3336, June.
    41. Card, David & Krueger, Alan B, 1995. "Time-Series Minimum-Wage Studies: A Meta-analysis," American Economic Review, American Economic Association, vol. 85(2), pages 238-243, May.
    42. Gazi M. Hassan & Mark J. Holmes, 2013. "Remittances and the real effective exchange rate," Applied Economics, Taylor & Francis Journals, vol. 45(35), pages 4959-4970, December.
    43. Bajzik, Josef & Havranek, Tomas & Irsova, Zuzana & Schwarz, Jiri, 2020. "Estimating the Armington elasticity: The importance of study design and publication bias," Journal of International Economics, Elsevier, vol. 127(C).
    44. Burçak Polat & Antonio Rodríguez Andrés, 2019. "Do emigrants’ remittances cause Dutch disease? A developing countries case study," The Economic and Labour Relations Review, , vol. 30(1), pages 59-76, March.
    45. Hem Chandra Basnet & Ficawoyi Donou-Adonsou & Kamal Upadhyaya, 2019. "Workers’ Remittances and the Dutch Disease: Evidence From South Asian Countries," International Economic Journal, Taylor & Francis Journals, vol. 33(4), pages 662-678, October.
    46. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    47. Havranek, Tomas & Irsova, Zuzana, 2011. "Estimating vertical spillovers from FDI: Why results vary and what the true effect is," Journal of International Economics, Elsevier, vol. 85(2), pages 234-244.
    48. Maria Cristina Zhunio & Sharmila Vishwasrao & Eric P. Chiang, 2012. "The influence of remittances on education and health outcomes: a cross country study," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4605-4616, December.
    49. Mr. Joannes Mongardini & Brett Rayner, 2009. "Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries," IMF Working Papers 2009/075, International Monetary Fund.
    50. Magnus, Jan R. & Powell, Owen & Prüfer, Patricia, 2010. "A comparison of two model averaging techniques with an application to growth empirics," Journal of Econometrics, Elsevier, vol. 154(2), pages 139-153, February.
    51. Md. Bakhtiar Uddin & Syed Mansoob Murshed, 2017. "International transfers and Dutch Disease: evidence from South Asian countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(3), pages 486-509, July.
    52. Muntasir Murshed & Seemran Rashid, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia," The Economics and Finance Letters, Conscientia Beam, vol. 7(1), pages 23-46.
    53. Zeugner, Stefan & Feldkircher, Martin, 2015. "Bayesian Model Averaging Employing Fixed and Flexible Priors: The BMS Package for R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 68(i04).
    54. Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
    55. Katsuya Ito, 2019. "Remittances and the Dutch Disease: Evidence from Panel Data for 18 Developing Countries," International Economic Journal, Taylor & Francis Journals, vol. 33(1), pages 1-8, January.
    56. Bruce E. Hansen, 2007. "Least Squares Model Averaging," Econometrica, Econometric Society, vol. 75(4), pages 1175-1189, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeynep Gizem Can & Hakki Ciftci, 2022. "International Remittances and Poverty: Blessing or Curse?," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(6), pages 544-561, June.
    2. Anil Shrestha & Makoto Kakinaka, 2022. "Remittance Inflows and Energy Transition of the Residential Sector in Developing Countries," Sustainability, MDPI, vol. 14(17), pages 1-19, August.
    3. Amar Anwar & Ichiro Iwasaki, 2023. "The Finance–Growth Nexus in Asia: A Meta-Analytic Approach," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 40(01), pages 13-48, March.
    4. Wanglin Ma & Sanghyun Hong & W. Robert Reed & Jianhua Duan & Phong Luu, 2023. "Yield effects of agricultural cooperative membership in developing countries: A meta‐analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 761-780, September.
    5. Anwar, Amar & Iwasaki, Ichiro, 2022. "The Finance–Growth Nexus inAsia : A Meta-Analytic Approach," CEI Working Paper Series 2022-03, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hao, Linna & Ahmad, Shabbir & Chang, Hsu-Ling & Umar, Muhammad, 2021. "Knowledge spill-over and institutional quality role in controlling Dutch disease: A case of BRICS countries," Resources Policy, Elsevier, vol. 72(C).
    2. Dominika Ehrenbergerova & Josef Bajzik & Tomas Havranek, 2023. "When Does Monetary Policy Sway House Prices? A Meta-Analysis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(2), pages 538-573, June.
    3. Zuzana Irsova & Hristos Doucouliagos & Tomas Havranek & T. D. Stanley, 2023. "Meta-Analysis of Social Science Research: A Practitioner´s Guide," Working Papers IES 2023/25, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2023.
    4. Zhang, Wei-Wei & Sadiq, Ramla & Khan, Tahseen Mohsan & Khan, Muhammad Mohsan, 2021. "Policy implications of remittances, trade liberalization and Dutch disease – A comparative analysis based on income categorization," Resources Policy, Elsevier, vol. 72(C).
    5. Bajzik, Josef, 2021. "Trading volume and stock returns: A meta-analysis," International Review of Financial Analysis, Elsevier, vol. 78(C).
    6. Gric, Zuzana & Bajzík, Josef & Badura, Ondřej, 2023. "Does sentiment affect stock returns? A meta-analysis across survey-based measures," International Review of Financial Analysis, Elsevier, vol. 89(C).
    7. Zigraiova, Diana & Havranek, Tomas & Irsova, Zuzana & Novak, Jiri, 2021. "How puzzling is the forward premium puzzle? A meta-analysis," European Economic Review, Elsevier, vol. 134(C).
    8. Adnan KHURSHID & Yin KEDONG & Adrian Cantemir CĂLIN & Zhaosu MENG & Naila NAZIR, 2018. "Remittances Inflows, Gain of Foreign Exchange or Trade Loss? New Evidence from Low, Lower-Middle and Middle-Income Groups," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 20-41, December.
    9. Ali Elminejad & Tomas Havranek & Roman Horvath & Zuzana Irsova, 2023. "Intertemporal Substitution in Labor Supply: A Meta-Analysis," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 1095-1113, December.
    10. Bajzik, Josef & Havranek, Tomas & Irsova, Zuzana & Schwarz, Jiri, 2020. "Estimating the Armington elasticity: The importance of study design and publication bias," Journal of International Economics, Elsevier, vol. 127(C).
    11. Anwar, Amar & Iwasaki, Ichiro, 2022. "The Finance–Growth Nexus inAsia : A Meta-Analytic Approach," CEI Working Paper Series 2022-03, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    12. Jindrich Matousek & Tomas Havranek & Zuzana Irsova, 2022. "Individual discount rates: a meta-analysis of experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 318-358, February.
    13. Mandon, Pierre & Woldemichael, Martha Tesfaye, 2023. "Has Chinese aid benefited recipient countries? Evidence from a meta-regression analysis," World Development, Elsevier, vol. 166(C).
    14. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    15. Amar Anwar & Ichiro Iwasaki, 2022. "Institutions and FDI from BRICS countries: a meta-analytic review," Empirical Economics, Springer, vol. 63(1), pages 417-468, July.
    16. Burçak Polat & Antonio Rodríguez Andrés, 2019. "Do emigrants’ remittances cause Dutch disease? A developing countries case study," The Economic and Labour Relations Review, , vol. 30(1), pages 59-76, March.
    17. Cazachevici, Alina & Havranek, Tomas & Horvath, Roman, 2020. "Remittances and economic growth: A meta-analysis," World Development, Elsevier, vol. 134(C).
    18. Iwasaki, Ichiro, 2022. "The finance-growth nexus in Latin America and the Caribbean: A meta-analytic perspective," World Development, Elsevier, vol. 149(C).
    19. Hien, Nguyen Phuc & Hong Vinh, Cao Thi & Phuong Mai, Vu Thi & Kim Xuyen, Le Thi, 2020. "Remittances, real exchange rate and the Dutch disease in Asian developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 131-143.
    20. Sèna Kimm Gnangnon, 2020. "Development aid, remittances inflows and wages in the manufacturing sector," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(2), pages 278-304, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:54:y:2022:i:36:p:4131-4153. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.