Remittances and the Dutch disease in Sub-Saharan Africa. A Dynamic Panel Approach
AbstractThis paper investigates the effect of remittance inflows on the real exchange rate in Sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 SSA countries, generalised method of moments by Arellano and Bover (1995) andfeasible generalised least squares by Parks (1967) and Kmenta (1971, 1986). We find that when cross-sectional dependence and individual effects are controlled for, remittances to SSA as a whole appreciate the underlying real exchange rate ofrecipient countries. However the Dutch-disease effect is not experienced via the loss of export competitiveness, because the exchange rate appreciation is mitigated by monetary policy positioning and overdependence on imports due to low levels of domestic production in these countries. We also find reverse causality between remittances and the real exchange rate.
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Bibliographic InfoPaper provided by Economic Research Southern Africa in its series Working Papers with number 259.
Length: 21 pages
Date of creation: 2011
Date of revision:
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Dutch disease; remittances; real exchange rate; Sub-Saharan Africa;
Other versions of this item:
- Emmanuel Owusu-Sekyere & Renee van Eyden & Francis Kemegue, 2011. "Remittances And The Dutch Disease In Sub-Saharan Africa: A Dynamic Panel Approach," Working Papers 201129, University of Pretoria, Department of Economics.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- F24 - International Economics - - International Factor Movements and International Business - - - Remittances
- F31 - International Economics - - International Finance - - - Foreign Exchange
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-12-13 (Africa)
- NEP-ALL-2011-12-13 (All new papers)
- NEP-MIG-2011-12-13 (Economics of Human Migration)
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