The Effect of Remittances on the Current Account in Developing and Emerging Economies
This paper presents an analysis of the effect of remittances on the current account in developing and emerging economies, incorporating an assessment of the extent to which exchange rate regimes impact the relationship. The main findings suggest th...
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/653721530122916127/The-effect-of-remittances-on-the-current-account-in-developing-and-emerging-economies http://hdl.handle.net/10986/29951 |
| Summary: | This paper presents an analysis of the
effect of remittances on the current account in developing
and emerging economies, incorporating an assessment of the
extent to which exchange rate regimes impact the
relationship. The main findings suggest there is a positive
effect of remittances on the current account
contemporaneously, but that the lagged effect is negative,
which could be indicative of the existence of some
underlying mechanisms characteristic of the Dutch disease
phenomenon. In addition, the results show that a more
flexible exchange regime dampens the contemporaneous
positive effect that remittances have on the current
account. The paper, therefore, asserts that policy makers
face trade-offs pertaining to the use of exchange rate
policy in managing the effects of remittances on the current
account, which should be given due consideration when such
policy choices are made. |
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