The Effect of Skilled Emigration on Real Exchange Rates Through the Wage Channel
Ouyang, Alice Y.; Paul, Saumik | March 2018
Abstract
Building on an analytical model, we provide cross-country empirical evidence that net skilled emigration appreciates bilateral real exchange rates through the wage channel in source countries. Chains of causality in the presence of the Law of One Price run through the “spending effect” and the “resource allocation effect,” analogous to the remittance-based Dutch disease effect. A pricing-to-market model allows pass-through for both traded and nontraded prices when the Law of One Price is violated. The skilled emigration elasticity of real exchange rate is estimated to be in the range of between .6 and .8, with internal prices playing a dominant role. Alternative model specifications show robust outcomes.
Citation
Ouyang, Alice Y.; Paul, Saumik. 2018. The Effect of Skilled Emigration on Real Exchange Rates Through the Wage Channel. © Asian Development Bank Institute. http://hdl.handle.net/11540/8107.Keywords
Macroeconomic
Macroeconomic Analysis
Macroeconomic Framework
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Macroeconomic Performance
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Macroeconomic Stabilization
Results-Based Monitoring And Evaluation
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Social condition
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International monetary relations
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National accounting
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Exports
Exchange
Comparative economics
Index number
Monetary policy
Value analysis
Adjustment cost
Transaction cost
Conditionality
International relations
Cumulative effects assessment
Grievance procedures
Participatory monitoring and evaluation
Exchange rate
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