California Accepted Papers Paper:
Remittances and the Dutch Disease: The Case of El Salvador
*Names in bold indicate Presenter
This study finds Dutch disease effects of remittances on agricultural and manufacturing sectors of El Salvador. El Salvador was dollarized in 2001 and most Salvadorian immigrants live in the US. This allows for estimation of the Dutch disease by examining whether a shock of remittances simultaneously appreciates the real exchange rate and reduces the tradable goods sector relative to non-tradable goods. Lartey et al. (2009) provide evidence for this effect on Salvadorian tradable goods. I follow their SVAR approach on recent and more detailed quarterly data of El Salvador for 2005-2017, to test this effect on the two tradable goods.
