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Remittances and Dutch Disease: A Meta-Analysis

Listed author(s):
  • Farid MAKHLOUF

Remittance flows are an important source of foreign exchange for various developing countries around the world. Given their growing importance in the last decade, their role in inducing Dutch disease symptoms in the developing countries has been extensively studied. However, the results of the analyses so far have been mixed. In this study, we conduct a meta-analysis of existing literature to estimate the over all effect of remittances on receiving countries’ real effective exchange rate (REER). We run fixed and random effect meta-analysis on studies taken from EconLit, Google Scholar and various working paper series and examine a total of 53 regressions taken from seven published and unpublished studies. We come up with evidence of a net appreciation of real exchange rate in the developing countries. Both the fixed and random effect models indicate a highly significant impact of foreign remittances on the REER. The results show also that the nature of the dependent variable, countries considered and the econometric technique used influence the impact of remittances REER, However the type of data (panel or times series) does not affect the results. Our investigations support the presence of selection bias. The findings support the view that in spite of their utility for the recipient households, remittances pose a challenge to the developing country on the macroeconomic level.

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File URL: http://gtl.univ-pau.fr/travaux/1869F_2013_2014_8Remittances_Dutch_Disease_Meta_Analysis_FMakhlouf.pdf
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Paper provided by CATT - UPPA - Université de Pau et des Pays de l'Adour in its series Working Papers with number 2013-2014_8.

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Length: 14 pages
Date of creation: Dec 2013
Date of revision: Dec 2013
Handle: RePEc:tac:wpaper:2013-2014_8
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  1. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, 05.
  2. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1), pages 701-709.
  3. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
  4. Farid Makhlouf & Mazhar Mughal, 2013. "Remittances, Dutch Disease, And Competitiveness: A Bayesian Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 67-97, June.
  5. Ghada Fayad, 2011. "Remittances: Dutch disease or export-led growth?," OxCarre Working Papers 057, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  6. 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.
  7. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
  8. Farid MAKHLOUF & Khaled CHNAINA, 2012. "Impact des Transferts de Fonds sur le Taux de Change Réel Effectif en Tunisie," Working Papers 2011-2012_4, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Feb 2012.
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