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A Theory of Workers' Remittances with An Application to Morocco

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  • Jacques Bouhga-Hagbe
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    Abstract

    This paper provides a model on how altruism, "attachment" to the home country, and portfolio diversification may act as potential motives behind workers'' remittances. It shows that the level of workers'' remittances depends on how great are their degrees of altruism and "attachment" to their home country, and should also depend on interest rate differentials between the home country and the country of residence if portfolio diversification motives are significant in the decision to remit. The model is applied to Morocco using co-integration techniques. The paper then discusses the stability of remittances in Morocco and the policy implications in light of the empirical findings.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/194.

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    Length: 35
    Date of creation: 01 Oct 2004
    Date of revision:
    Handle: RePEc:imf:imfwpa:04/194

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    Related research

    Keywords: Salary remittances; Economic models; remittances; equation; workers ? remittances; migration; statistics; equations; correlation; econometrics; logarithm; estimation period; predictions; remittance; impact of remittances; time series; statistic; hypothesis testing; sample size; cointegration; migrant; significance levels; determinants of remittances; probability; remittance flows; optimization; international remittances; constant term; migrant remittances; prediction; effect of remittances; capital flows; goodness of fit; migrants ? remittances; financial statistics; use of remittances; effects of remittances; uses of remittances; effect of remittances on growth; remitters; impact of remittances on labor force participation; autocorrelation; random error; regular remittances; remittances flow; sampling; immigrant remittance; estimation procedure; skewness; kurtosis; correlations; regression equation; vector autoregression; recipients of remittances; role of remittances;

    This paper has been announced in the following NEP Reports:

    References

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    1. Dickey, David A & Rossana, Robert J, 1994. "Cointegrated Time Series: A Guide to Estimation and Hypothesis Testing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(3), pages 325-53, August.
    2. Samir Jahjah & Ralph Chami & Connel Fullenkamp, 2003. "Are Immigrant Remittance Flows a Source of Capital for Development," IMF Working Papers 03/189, International Monetary Fund.
    3. Johnson, George E & Whitelaw, W E, 1974. " Urban-Rural Income Transfers in Kenya: An Estimated-Remittances Function," Economic Development and Cultural Change, University of Chicago Press, vol. 22(3), pages 473-79, April.
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    8. Joseph G. Altonji & Fumio Hayashi & Laurence J. Kotlikoff, 1989. "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data," NBER Working Papers 3046, National Bureau of Economic Research, Inc.
    9. Poonam Gupta & James P. F. Gordon, 2004. "Nonresident Deposits in India," IMF Working Papers 04/48, International Monetary Fund.
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    11. Glytsos, Nicholas P, 1993. "Measuring the Income Effects of Migrant Remittances: A Methodological Approach Applied to Greece," Economic Development and Cultural Change, University of Chicago Press, vol. 42(1), pages 131-68, October.
    12. Elbadawi, Ibrahim & de Rezende Rocha, Robert, 1992. "Determinants of expatriate workers'remittances in North Africa and Europe," Policy Research Working Paper Series 1038, The World Bank.
    13. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
    14. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
    15. Peter C.B. Phillips, 1985. "Understanding Spurious Regressions in Econometrics," Cowles Foundation Discussion Papers 757, Cowles Foundation for Research in Economics, Yale University.
    16. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
    17. Brown, Richard P. C., 1997. "Estimating remittance functions for Pacific Island Migrants," World Development, Elsevier, vol. 25(4), pages 613-626, January.
    18. Banerjee, Anindya, et al, 1986. "Exploring Equilibrium Relationships in Econometrics through Static Models: Some Monte Carlo Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 253-77, August.
    19. Jean-Claude Nachega, 2001. "A Cointegration Analysis of Broad Money Demand in Cameroon," IMF Working Papers 01/26, International Monetary Fund.
    20. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
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    Citations

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    Cited by:
    1. Jacques Bouhga-Hagbe, 2006. "Altruism and Workers' Remittances," IMF Working Papers 06/130, International Monetary Fund.
    2. Jonathan Yoder & Adam McCoy & Mudziviri Nziramasanga, 2008. "The check is in the mail: Household characteristics and migrant remittance from the U.S. to Mexico," Working Papers 2008-1, School of Economic Sciences, Washington State University.
    3. Erik Lueth & Marta Ruiz-Arranz, 2006. "A Gravity Model of Workers' Remittances," IMF Working Papers 06/290, International Monetary Fund.
    4. Barua, Shubhasish & Majumder, Md. Alauddin & Akhtaruzzaman, Dr. Md., 2007. "Determinants of Workers’ Remittances in Bangladesh: An Empirical Study," MPRA Paper 15080, University Library of Munich, Germany.
    5. International Monetary Fund, 2006. "Determinants of Emigrant Deposits in Cape Verde," IMF Working Papers 06/132, International Monetary Fund.
    6. Alexei Kireyev, 2006. "The Macroeconomics of Remittances," IMF Working Papers 06/2, International Monetary Fund.
    7. Neagu , Ileana C. & Schiff, Maurice, 2009. "Remittance stability, cyclicality and stabilizing impact in developing countries," Policy Research Working Paper Series 5077, The World Bank.
    8. Carlos Vargas-Silva & Peng Huang, 2005. "Macroeconomic Determinants of Workers’ Remittances: Host vs. Home Country’s Economic Conditions," International Finance 0507007, EconWPA, revised 29 Jul 2005.
    9. Marta Ruiz-Arranz & Erik Lueth, 2007. "Are Workers' Remittances a Hedge Against Macroeconomic Shocks? the Case of Sri Lanka," IMF Working Papers 07/22, International Monetary Fund.
    10. Michael T. Gapen & Thomas F. Cosimano & Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts," IMF Working Papers 06/61, International Monetary Fund.

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