Are workers' remittances a hedge against macroeconomic shocks? The case of Sri Lanka
AbstractThis paper estimates a vector error correction model for Sri Lanka in order to determine the response of remittance receipts to macroeconomic shocks. This is the first attempt of its kind in the literature. The authors found that remittance receipts are pro-cyclical and decline when the country’s currency weakens, undermining their usefulness as a shock absorber. On the other hand, remittances increase in response to oil-price shocks, reflecting the fact that most overseas Sri Lankan are employed in the Persian Gulf States. The pro-cyclicality of remittances calls into question the notion that remittances are largely motivated by altruism.
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Bibliographic InfoArticle provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its journal Asia-Pacific Development Journal.
Volume (Year): 14 (2007)
Issue (Month): 1 (June)
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More information through EDIRC
Workers' remittances; Cyclicality; Macroeconomic Shock; Vector Error Correction Model;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- F30 - International Economics - - International Finance - - - General
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
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- El-Sakka, M. I. T. & McNabb, Robert, 1999. "The Macroeconomic Determinants of Emigrant Remittances," World Development, Elsevier, vol. 27(8), pages 1493-1502, August.
- Serdar Sayan, 2006. "Business Cycles and Workers' Remittances: How Do Migrant Workers Respond to Cyclical Movements of GDP at Home?," IMF Working Papers 06/52, International Monetary Fund.
- Ceyhun Bora Durdu & Serdar Sayan, 2008.
"Emerging market business cycles with remittance fluctuations,"
International Finance Discussion Papers
946, Board of Governors of the Federal Reserve System (U.S.).
- Ceyhun Bora Durdu & Serdar Sayan, 2010. "Emerging Market Business Cycles with Remittance Fluctuations," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 303-325, June.
- Dean Yang, 2011. "Migrant Remittances," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 129-52, Summer.
- Jean-Louis Combes & Christian Ebeke & Mireille Ntsama Etoundi & Thierry Yogo, 2012.
"Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries?,"
- Christian EBEKE & Jean-Louis COMBES & Mireille NTSAMA ETOUNDI, 2011. "Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries?," Working Papers 201121, CERDI.
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