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Remittance flows and US monetary policy

Author

Listed:
  • Immaculate Machasio

    (The World Bank Group)

  • Peter Tillmann

    (Justus Liebig University Giessen)

Abstract

Remittance inflows are driven by macroeconomic conditions in the home and the host economies, respectively. In this paper, we study the effect of US monetary policy on remittance flows into economies in Latin American and the Caribbean. The role of Fed policy for remittances has not yet been studied. We estimate a series of panel local projections for remittance inflows into eight countries. A surprise change in US monetary conditions has a strong and highly significant negative effect on inflows. Our finding remains robust if we change the sample period or include additional variables. Hence, our paper establishes a remittance-channel through which the Fed affects the business cycle abroad.

Suggested Citation

  • Immaculate Machasio & Peter Tillmann, 2023. "Remittance flows and US monetary policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(3), pages 545-561, August.
    • Handle: RePEc:spr:weltar:v:159:y:2023:i:3:d:10.1007_s10290-022-00478-x
    DOI: 10.1007/s10290-022-00478-x
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    More about this item

    Keywords

    Remittances; Migration; Business cycle; Monetary policy; Spillovers;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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