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Do Workers’ Remittances Promote Consumption Stability In Egypt?

Author

Listed:
  • Omneia HELMY
  • Chahir ZAKI
  • Aliaa ABDALLAH

Abstract

This paper examines cyclical characteristics of remittances and explores their counterbalancing and consumption-smoothing potential. First, it uses quarterly data to better reflect the short-term dynamics of consumption and remittances. Second, it uses different methodologies to examine whether the results are robust or not, namely OLS, VAR and SVAR. Third, to control for the endogeneity of remittances, we use a Generalized Method of Moments technique by instrumenting remittances. Finally, we apply this on the Egyptian case since studies on the MENA region in this field are quite rare. Our main findings show that there is a significant consumption smoothing effect of remittances. Moreover, we found that, even when the endogeneity of remittances is controlled for, this consumption smoothing effect remain robust. This finding is robust under a battery of sensitivity tests.

Suggested Citation

  • Omneia HELMY & Chahir ZAKI & Aliaa ABDALLAH, 2020. "Do Workers’ Remittances Promote Consumption Stability In Egypt?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 20(2), pages 127-144.
    • Handle: RePEc:eaa:aeinde:v:20:y:2020:i:2_10
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    References listed on IDEAS

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    More about this item

    Keywords

    Egypt; remittances; business cycle; consumption smoothing.;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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