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Transferring remittances through central banks: A tool applied to the Guatemalan exchange rate

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  • Arnoldo López‐Marmolejo
  • Daniel Ventosa‐Santaulària

Abstract

Countries where the volume of remittances received represents a significant proportion of their gross domestic product usually face short‐term pressures on their exchange rates that are unrelated to their economic fundamentals. In this article, we analyze how a remittance payment system involving the central banks of the source and destination countries of such remittances could mitigate the pressures on the exchange rate in the receiving country. To quantify the possible effect of such a system, we make an estimate for the case of Guatemala. We also consider the other benefits this system might provide for recipient economies.

Suggested Citation

  • Arnoldo López‐Marmolejo & Daniel Ventosa‐Santaulària, 2024. "Transferring remittances through central banks: A tool applied to the Guatemalan exchange rate," Review of Development Economics, Wiley Blackwell, vol. 28(2), pages 630-648, May.
    • Handle: RePEc:bla:rdevec:v:28:y:2024:i:2:p:630-648
    DOI: 10.1111/rode.13071
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    References listed on IDEAS

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    1. N. Nergiz Dincer & Barry Eichengreen, 2014. "Central Bank Transparency and Independence: Updates and New Measures," International Journal of Central Banking, International Journal of Central Banking, vol. 10(1), pages 189-259, March.
    2. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, vol. 79(1), pages 102-116, September.
    3. Zhongjun Qu & Pierre Perron, 2007. "Estimating and Testing Structural Changes in Multivariate Regressions," Econometrica, Econometric Society, vol. 75(2), pages 459-502, March.
    4. Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
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