New Publication in Oxford Development Studies

Our paper “Remittances, Exchange Rates, and Central Bank Independence” was recently published in Oxford Development Studies. This is work in co-authorship with Carolina Garriga-Phillips (Essex University). In this paper, we explore how remittances affect the choice of exchange rate regimes. Previous research shows that remittances, by easing the ‘impossible trinity’, increase the probability of governments adopting fixed exchange rates. However, that research overlooks the conditioning effect of monetary and political institutions. We argue that remittances, by altering recipient governments’ incentives to use monetary policy counter-cyclically, make central bank independence a credible anti-inflationary tool in less credible regimes; that is, autocracies. Thus, autocracies that receive remittances do not need to rely on fixed exchange rates. In this way, remittances open policy alternatives for developing autocracies. Readers can access the paper here.


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