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Determinants of Remittances; Evidence From tonga

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  • Huidan Huidan Lin

Abstract

This paper analyzes the determinants of remittances to Tonga. The results indicate that macroeconomic conditions in remitting countries and exchange rate fluctuations influence remittances. In particular, remittances growth falls when the Tongan currency appreciates, but increases with higher real GDP growth and lower unemployment in remitting countries. The analysis also finds that the influence of these determinants varies with the recipients of remittances, with remittances to non-profit organizations being more sensitive to an appreciation of the Tongan currency and the interest rate differential between Tonga and remitting countries than remittances to households. However, the analysis does not find evidence of " Dutch Disease" in Tonga, as the real exchange rate does not appear to be affected by remittances.

Suggested Citation

  • Huidan Huidan Lin, 2011. "Determinants of Remittances; Evidence From tonga," IMF Working Papers 11/18, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/18
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    References listed on IDEAS

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    1. Mario Holzner, 2006. "Real Exchange Rate Distortion in Southeast Europe," wiiw Balkan Observatory Working Papers 68, The Vienna Institute for International Economic Studies, wiiw.
    2. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    3. Arvind Subramanian & Raghuram Rajan, 2005. "What Undermines Aid’s Impact on Growth?," IMF Working Papers 05/126, International Monetary Fund.
    4. Martin Petri & Tahsin Saadi-Sedik, 2006. "To Smooth or Not to Smooth—The Impact of Grants and Remittances on the Equilibrium Real Exchange Rate in Jordan," IMF Working Papers 06/257, International Monetary Fund.
    5. Yves Bourdet & Hans Falck, 2006. "Emigrants' remittances and Dutch Disease in Cape Verde," International Economic Journal, Taylor & Francis Journals, vol. 20(3), pages 267-284.
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