Lartey, Emmanuel K. K. Mandelman, Federico S. Acosta, Pablo A.
Working Paper No. 2008-12
Federal Reserve Bank of Atlanta, Atlanta, GA
Using disaggregated sectorial data, this study shows that rising levels of remittances have spending effects that lead to real exchange rate appreciation and resource movement effects that favor the nontradable sector at the expense of tradable goods production. These characteristics are two aspects of the phenomenon known as Dutch disease. The results further indicate that these effects operate more strongly under fixed nominal exchange rate regimes.
Dutch disease real exchange rate exchange rate regimes remittances panel data system generalized method of moments