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The paper explores the impact of workers' remittances on the level of export diversification. The hypothesis is that … significant inflow of remittances causes overvaluation of real exchange rate, which in turn deteriorates diversity of export. The … diversified export. The economic intuition behind is that remittance-caused real exchange rate appreciation unevenly suppresses …
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Voluminous theoretical and empirical research shows that real exchange rate (RER) undervaluation could be conducive to economic development. Why do countries then often avoid the pursuit of policies that facilitate undervaluation or even intentionally pursue RER overvaluation? We address this...
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This paper studies the role of the exchange rate regime for trade of new products. It first provides VAR evidence that a rise in external productivity shifts trade away from new products and more so in fixed regimes. Then, it presents a model with firm dynamics in line with this evidence. We...
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