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Remittances and the real exchange rate

Author

Listed:
  • Lopez, Humberto
  • Molina, Luis
  • Bussolo, Maurizio

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.

Suggested Citation

  • Lopez, Humberto & Molina, Luis & Bussolo, Maurizio, 2007. "Remittances and the real exchange rate," Policy Research Working Paper Series 4213, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4213
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    References listed on IDEAS

    as
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    Keywords

    Economic Stabilization; Macroeconomic Management; Economic Theory&Research; Remittances; Achieving Shared Growth;
    All these keywords.

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