Remittances and the Dutch Disease

Remittances and the Dutch Disease

Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances on emerging market economies. We find that, whether altruistically motivated or otherwise, an increase in remittance flows leads...

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Bibliographic Details
Main Authors: Acosta, Pablo A., Lartey, Emmanuel K. K., Mandelman, Federico S.
Format: Journal Article
Language:EN
Published: 2012
Subjects:
Remittances F240
International Linkages to Development
Role of International Organizations O190
Resource Booms Q330
Online Access:http://hdl.handle.net/10986/4837
id okr-10986-4837
recordtype oai_dc
spelling okr-10986-48372021-04-23T14:02:19Z Remittances and the Dutch Disease Acosta, Pablo A. Lartey, Emmanuel K. K. Mandelman, Federico S. Remittances F240 International Linkages to Development Role of International Organizations O190 Resource Booms Q330 Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances on emerging market economies. We find that, whether altruistically motivated or otherwise, an increase in remittance flows leads to a decline in labor supply and an increase in consumption demand that is biased toward non-tradables. The higher non-tradable prices serve as incentive for an expansion of that sector, culminating in reallocation of labor away from the tradable sector--a phenomenon known as the Dutch disease. Quantitative results also indicate that remittances improve the welfare of households because they smooth income flows and increase consumption and leisure levels. A BVAR analysis provides results that are consistent with the dynamics of the model. 2012-03-30T07:29:59Z 2012-03-30T07:29:59Z 2009 Journal Article Journal of International Economics 00221996 http://hdl.handle.net/10986/4837 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article El Salvador
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language EN
topic Remittances F240
International Linkages to Development
Role of International Organizations O190
Resource Booms Q330
spellingShingle Remittances F240
International Linkages to Development
Role of International Organizations O190
Resource Booms Q330
Acosta, Pablo A.
Lartey, Emmanuel K. K.
Mandelman, Federico S.
Remittances and the Dutch Disease
geographic_facet El Salvador
relation http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances on emerging market economies. We find that, whether altruistically motivated or otherwise, an increase in remittance flows leads to a decline in labor supply and an increase in consumption demand that is biased toward non-tradables. The higher non-tradable prices serve as incentive for an expansion of that sector, culminating in reallocation of labor away from the tradable sector--a phenomenon known as the Dutch disease. Quantitative results also indicate that remittances improve the welfare of households because they smooth income flows and increase consumption and leisure levels. A BVAR analysis provides results that are consistent with the dynamics of the model.
format Journal Article
author Acosta, Pablo A.
Lartey, Emmanuel K. K.
Mandelman, Federico S.
author_facet Acosta, Pablo A.
Lartey, Emmanuel K. K.
Mandelman, Federico S.
author_sort Acosta, Pablo A.
title Remittances and the Dutch Disease
title_short Remittances and the Dutch Disease
title_full Remittances and the Dutch Disease
title_fullStr Remittances and the Dutch Disease
title_full_unstemmed Remittances and the Dutch Disease
title_sort remittances and the dutch disease
publishDate 2012
url http://hdl.handle.net/10986/4837
_version_ 1764392950116122624

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