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The effect of remittances prior to an election

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  • Jean-Louis Combes

    (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)

  • Christian Ebeke

    (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)

  • Mathilde Maurel

    (Centre d'Economie de la Sorbonne - Centre d'Economie de la Sorbonne - Centre d'Economie de la Sorbonne)

Abstract

This paper focuses on the relationships between remittances, elections, and government consumption as a percentage of GDP. We combine data from the National Elections across Democracy and Autocracy (NELDA) dataset compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators dataset. We focus on 70 young democracies in the developing world. The period under investigation is 1990-2010. The main objective of the paper is to assess whether remittances have an influence on the political manipulation, which may occur prior to an election, through in increase in the government consumption-to-GDP-ratio. It appears that remittances dampen the political business cycle (PBC). Furthermore, the PBC is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7 percent of GDP. Those findings are robust to different econometric strategies and robustness checks.

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Paper provided by HAL in its series Working Papers with number halshs-00826999.

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Date of creation: 28 May 2013
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Handle: RePEc:hal:wpaper:halshs-00826999

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Keywords: Political Business Cycles; Remittances;

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Cited by:
  1. Christian Ebeke & Dilan Ölcer, 2013. "Fiscal Policy over the Election Cycle in Low-Income Countries," IMF Working Papers 13/153, International Monetary Fund.

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