Financial Development, Remittances, and Real Exchange Rate Appreciation

For developing countries, remittances are an important and expanding source of capital, equivalent to two-thirds of overall foreign direct investment and nearly 2 percent of gross domestic product. This article examines the relationship between remittance inflows, financial sector development, and t...

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Main Authors:	Acosta, Pablo A., Baerg, Nicole Rae, Mandelman, Federico S.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Financial Markets and the Macroeconomy E440 Remittances F240 Foreign Exchange F310 Macroeconomic Analyses of Economic Development O110 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190
Online Access:	http://hdl.handle.net/10986/4797

id	okr-10986-4797
recordtype	oai_dc
spelling	okr-10986-47972021-04-23T14:02:19Z Financial Development, Remittances, and Real Exchange Rate Appreciation Acosta, Pablo A. Baerg, Nicole Rae Mandelman, Federico S. Financial Markets and the Macroeconomy E440 Remittances F240 Foreign Exchange F310 Macroeconomic Analyses of Economic Development O110 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190 For developing countries, remittances are an important and expanding source of capital, equivalent to two-thirds of overall foreign direct investment and nearly 2 percent of gross domestic product. This article examines the relationship between remittance inflows, financial sector development, and the real exchange rate. The authors test whether financial sector development can prevent appreciation of the real exchange rate. In particular, they show that well-developed financial sectors can more effectively channel remittances into investment opportunities. Using panel data for 109 developing and transition countries for 1990-2003, the authors find that remittances by themselves tend to put upward pressure on the real exchange rate. But this effect is weaker in countries with deeper and more sophisticated financial markets, which seem to retain trade competitiveness. 2012-03-30T07:29:47Z 2012-03-30T07:29:47Z 2009 Journal Article Federal Reserve Bank of Atlanta Economic Review 07321813 http://hdl.handle.net/10986/4797 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Financial Markets and the Macroeconomy E440 Remittances F240 Foreign Exchange F310 Macroeconomic Analyses of Economic Development O110 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190
spellingShingle	Financial Markets and the Macroeconomy E440 Remittances F240 Foreign Exchange F310 Macroeconomic Analyses of Economic Development O110 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 International Linkages to Development Role of International Organizations O190 Acosta, Pablo A. Baerg, Nicole Rae Mandelman, Federico S. Financial Development, Remittances, and Real Exchange Rate Appreciation
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	For developing countries, remittances are an important and expanding source of capital, equivalent to two-thirds of overall foreign direct investment and nearly 2 percent of gross domestic product. This article examines the relationship between remittance inflows, financial sector development, and the real exchange rate. The authors test whether financial sector development can prevent appreciation of the real exchange rate. In particular, they show that well-developed financial sectors can more effectively channel remittances into investment opportunities. Using panel data for 109 developing and transition countries for 1990-2003, the authors find that remittances by themselves tend to put upward pressure on the real exchange rate. But this effect is weaker in countries with deeper and more sophisticated financial markets, which seem to retain trade competitiveness.
format	Journal Article
author	Acosta, Pablo A. Baerg, Nicole Rae Mandelman, Federico S.
author_facet	Acosta, Pablo A. Baerg, Nicole Rae Mandelman, Federico S.
author_sort	Acosta, Pablo A.
title	Financial Development, Remittances, and Real Exchange Rate Appreciation
title_short	Financial Development, Remittances, and Real Exchange Rate Appreciation
title_full	Financial Development, Remittances, and Real Exchange Rate Appreciation
title_fullStr	Financial Development, Remittances, and Real Exchange Rate Appreciation
title_full_unstemmed	Financial Development, Remittances, and Real Exchange Rate Appreciation
title_sort	financial development, remittances, and real exchange rate appreciation
publishDate	2012
url	http://hdl.handle.net/10986/4797
_version_	1764392797042900992

Financial Development, Remittances, and Real Exchange Rate Appreciation

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