Is the Dutch disease effect valid in relation to remittances and the real exchange rate in Fiji?

Abstract

ABSTRACTIn recent years, increased economic integration and enhanced labor mobility has led to an increasing flow of remittances across the globe. Many scholars over time have explored its positive contributions, while few have investigated its consequences on the recipient economies. A subsequent appreciation of the local currency due to remittances is known as the ‘Dutch disease’ effect. In this paper, we examine the validity of the ‘Dutch disease’ effect in the context of Fiji and find that remittances do not result in the Dutch disease effect in the long run.