Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach
This paper investigates the effect of remittance inflows on real exchange rates in sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 countries, the method of moments estimator developed by Arellano and Bover (1995) and the feasible generalized least squares estimator developed by P...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Economics and Human Sciences in Warsaw
2014-09-01
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| Series: | Contemporary Economics |
| Online Access: | http://ce.vizja.pl/en/download-pdf/id/373 |
| _version_ | 1797425387075010560 |
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| author | Emmanuel Owusu-Sekyere Reneé van Eyden Francis M Kemegue |
| author_facet | Emmanuel Owusu-Sekyere Reneé van Eyden Francis M Kemegue |
| author_sort | Emmanuel Owusu-Sekyere |
| collection | DOAJ |
| description | This paper investigates the effect of remittance inflows on real exchange rates in sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 countries, the method of moments estimator developed by Arellano and Bover (1995) and the feasible generalized least squares estimator developed by Parks (1967) and Kmenta (1986). We find that when cross-sectional dependence and individual effects are controlled for, remittances to sub-Saharan Africa as a whole increase the underlying real exchange rates of recipient countries. However, this real exchange rate appreciation is mitigated by monetary policy interventions and the direction of fiscal expenditures towards tradable goods. Thus, the real exchange rate appreciation does not lead to the loss of export competitiveness or a worsening of the trade deficit in the countries in the panel. |
| first_indexed | 2024-03-09T08:15:24Z |
| format | Article |
| id | doaj.art-1eb04c50e56a4b65af86d25725c68774 |
| institution | Directory Open Access Journal |
| issn | 2084-0845 |
| language | English |
| last_indexed | 2024-03-09T08:15:24Z |
| publishDate | 2014-09-01 |
| publisher | University of Economics and Human Sciences in Warsaw |
| record_format | Article |
| series | Contemporary Economics |
| spelling | doaj.art-1eb04c50e56a4b65af86d25725c687742023-12-02T22:17:18ZengUniversity of Economics and Human Sciences in WarsawContemporary Economics2084-08452014-09-0183110510.5709/ce.1897-9254.146373Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel ApproachEmmanuel Owusu-Sekyere0Reneé van Eyden1Francis M Kemegue2---This paper investigates the effect of remittance inflows on real exchange rates in sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 countries, the method of moments estimator developed by Arellano and Bover (1995) and the feasible generalized least squares estimator developed by Parks (1967) and Kmenta (1986). We find that when cross-sectional dependence and individual effects are controlled for, remittances to sub-Saharan Africa as a whole increase the underlying real exchange rates of recipient countries. However, this real exchange rate appreciation is mitigated by monetary policy interventions and the direction of fiscal expenditures towards tradable goods. Thus, the real exchange rate appreciation does not lead to the loss of export competitiveness or a worsening of the trade deficit in the countries in the panel.http://ce.vizja.pl/en/download-pdf/id/373 |
| spellingShingle | Emmanuel Owusu-Sekyere Reneé van Eyden Francis M Kemegue Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach Contemporary Economics |
| title | Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach |
| title_full | Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach |
| title_fullStr | Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach |
| title_full_unstemmed | Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach |
| title_short | Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach |
| title_sort | remittances and the dutch disease in sub saharan africa a dynamic panel approach |
| url | http://ce.vizja.pl/en/download-pdf/id/373 |
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