Do emigrants' remittances cause Dutch disease? A developing countries case study

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F19%3A10242070" target="_blank" >RIV/61989100:27510/19:10242070 - isvavai.cz</a>

Result on the web

<a href="https://journals.sagepub.com/doi/10.1177/1035304619828560" target="_blank" >https://journals.sagepub.com/doi/10.1177/1035304619828560</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1177/1035304619828560" target="_blank" >10.1177/1035304619828560</a>

Result language

angličtina

Original language name

Do emigrants' remittances cause Dutch disease? A developing countries case study

Original language description

Although the positive socio-economic effects of remittances for recipient countries in the short term are unmistakable, inflows of remittances may at the same time exert adverse effects on the trade competitiveness of an economy, by appreciating the real exchange rate. This phenomenon is characterised as an instance of the Dutch disease&apos; - the negative impact of windfall revenue inflows on the competitiveness of other tradable sectors and hence on overall economic growth. While the real effect of workers&apos; remittances on real exchange rates in a recipient economy is still a controversial issue, several studies have analysed evidence for the existence of the Dutch disease&apos; phenomenon in various sets of countries. The main objective of this study is to examine whether remittance flows have had any adverse effect on the international trade competitiveness of a selected group of developing countries during the period from 1995 to 2014. Using a one-step system Generalised Method of Moments specification within a simultaneous equation approach, it shows that remittance flows depreciate the real exchange rate at their levels and that the lagged value of remittances create the Dutch disease for this country group. In addition, we confirm that while trade openness and world real interest rates contribute to a depreciation in real exchange rates, gross domestic product per capita and net Official Development Aid inflows tend to appreciate real exchange rates. A policy implication is that trade liberalisation policies that lower tariff rates on capital imports and new export-oriented incentive programmes should be accompanied by measures designed to prevent appreciation in the real exchange rate: steps in this direction such as recent macroeconomic and prudential capital flow management initiatives are briefly referenced.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50202 - Applied Economics, Econometrics

Project

—

Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2019

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Economic and Labour Relations Review

ISSN

1035-3046

e-ISSN

—

Volume of the periodical

30

Issue of the periodical within the volume

1

Country of publishing house

GB - UNITED KINGDOM

Number of pages

18

Pages from-to

59-76

UT code for WoS article

000461570600004

EID of the result in the Scopus database

2-s2.0-85061574544