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Remittances and Household Consumption Instability in Developing Countries

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  • Combes, Jean-Louis
  • Ebeke, Christian

Abstract

Summary This paper analyzes the impact of remittances on household consumption instability in a large panel of developing countries. There are four main results. First, remittances significantly reduce household consumption instability. Second, remittances play an insurance role by dampening the effects of various sources of consumption instability in developing countries (natural disasters, agricultural shocks, discretionary fiscal policy, systemic financial and banking crises and exchange rate instability). Third, the stabilizing role played by remittances is stronger in less financially developed countries. Fourth, the overall stabilizing effect of remittances is mitigated when remittances exceed 6% of GDP.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 7 (July)
Pages: 1076-1089

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:7:p:1076-1089

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: remittances consumption instability financial development shocks threshold effects developing countries;

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