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Research paper thumbnail of REMITTANCES AND THE DUTCH DISEASE: Macroeconomic Consequences in Bangladesh

The magnitude of the flow of remittances and its growth rate in Bangladesh are becoming gradually... more The magnitude of the flow of remittances and its growth rate in Bangladesh are becoming gradually more significant. This huge flow of remittances can affect the production sector, employment structure and finally, the scale of external trade competitiveness of the economy through the Real Exchange Rate (RER). Therefore, the movement of RER from its equilibrium position is very important and at the same time, it is also crucial to identify the influencing factors of this process. Using Johansen cointegration and Vector Error Correction model, this study has found that this massive flow of remittances is considerably appreciating its RER and in fact, deteriorating the external trade competitiveness of Bangladesh. Thus, this procedure is slowly destroying the economy of Bangladesh through Dutch Disease. Therefore, gradual relaxation of the trade barrier including promoting external trade diversification along with diverting the remittances flow from non-tradable sector to priority inve...

Research paper thumbnail of REMITTANCES AND THE DUTCH DISEASE: Macroeconomic Consequences in Bangladesh

The magnitude of the flow of remittances and its growth rate in Bangladesh are becoming gradually... more The magnitude of the flow of remittances and its growth rate in Bangladesh are becoming gradually more significant. This huge flow of remittances can affect the production sector, employment structure and finally, the scale of external trade competitiveness of the economy through the Real Exchange Rate (RER). Therefore, the movement of RER from its equilibrium position is very important and at the same time, it is also crucial to identify the influencing factors of this process. Using Johansen cointegration and Vector Error Correction model, this study has found that this massive flow of remittances is considerably appreciating its RER and in fact, deteriorating the external trade competitiveness of Bangladesh. Thus, this procedure is slowly destroying the economy of Bangladesh through Dutch Disease. Therefore, gradual relaxation of the trade barrier including promoting external trade diversification along with diverting the remittances flow from non-tradable sector to priority inve...

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