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Tuesday, 15 March 2011

What determines remittances?

The results indicate that macroeconomic conditions in remitting countries and exchange rate fluctuations influence remittances. Remittances growth falls with an appreciating currency of Tonga, but increases with higher real GDP growth and lower unemployment rate in remitting countries. With regard to the impact of remittances in exchange rates, the analysis does not find evidence of ―Dutch Disease in Tonga. The real effective exchange rate does not respond significantly to the change in remittance flows.
From the latest paper on IMF working paper on - Determinants of Remittances : Evidence from Tonga.

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