Exchange Rate Flexibility and the Effect of Remittances on Economic Growth

Lartey, Emmanuel K.K.

World Bank, Washington, DC

关键词: exchange rates;    remittances;    economic growth;    financial development;    panel data;   

DOI  :  10.1596/1813-9450-7932
RP-ID  :  WPS7932

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper studies the question ofwhether exchange rate policy affects the impact ofremittances on economic growth in recipient countries. Thepaper utilizes a comprehensive data set that comprisesannual observations for 135 developing and transitioncountries, spanning 1970-2007. The data for exchange rateregimes is based on the Reinhart and Rogoff exchange rateregime classification, whereas the data for remittances andall other variables are from the World Bank's WorldDevelopment Indicators database. The findings indicate thatmore flexible exchange rate regimes are associated with agreater increase in economic growth following an increase inremittances, but also that the impact of remittances ongrowth is positive under a fixed exchange rate regime. Theestimates suggest that a 1 percent increase in remittancesincreases per capita growth by about 0.79 percent under afixed exchange rate regime, and that this effect increasesby about 0.13 percent for a 1 point increase in the exchangerate flexibility index. The results further suggest that theeffect of remittances under a fixed exchange rate regime ispositive in less financially developed countries as well,but do not provide conclusive evidence that this effectvaries inversely with exchange rate flexibility in sucheconomies as theorized.