Remittances and the Real Exchange Rate

33 Pages Posted: 20 Apr 2016

See all articles by Humberto Lopez

Humberto Lopez

World Bank - Research Department

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Luis Molina

Banco de España

Date Written: April 1, 2007

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, Pro-Poor Growth and Inequality

Suggested Citation

Lopez, Humberto and Bussolo, Maurizio and Molina, Luis, Remittances and the Real Exchange Rate (April 1, 2007). World Bank Policy Research Working Paper No. 4213. Available at SSRN: https://ssrn.com/abstract=981304

Humberto Lopez

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Maurizio Bussolo (Contact Author)

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Luis Molina

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Register to save articles to
your library

Register

Paper statistics

Downloads
534
Abstract Views
2,620
rank
51,401
PlumX Metrics