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Are Foreign Aid and Remittance Inflows a Hedge Against Food Price Shocks?

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  • International Monetary Fund

Abstract

This paper explores the role of foreign aid and remittance inflows in the mitigation of the effects of food price shocks. Using a large sample of developing countries and mobilising dynamic panel data specifications, the econometric results yield two important findings. First, remittance and aid inflows significantly dampen the effect of food price shocks in the most vulnerable countries. Second, a lower remittance-to-GDP ratio is required in order to fully absorb the effects of food price shocks compared to the corresponding aid-to-GDP ratio.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/67.

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Length: 28
Date of creation: 01 Mar 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/67

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Related research

Keywords: Agricultural commodities; Capital inflows; Developing countries; Economic models; External shocks; Price increases; Workers remittances; food price; remittances; remittance; remittance inflows; food imports; food prices; fao; workers ? remittances; food aid; effectiveness of remittances; migration; food import; effects of remittances; data on remittances; bilateral remittances; diaspora; international remittances; capital flows; effect of remittance; food security; remittance data; amount of remittances; food insecurity; total amount of remittances; use of remittances; food safety;

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References

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  1. Paul J. Burke & Andrew Leigh, 2010. "Do output contractions trigger democratic change?," CEPR Discussion Papers 633, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Mohapatra, Sanket & Joseph, George & Ratha, Dilip, 2009. "Remittances and natural disasters : ex-post response and contribution to ex-ante preparedness," Policy Research Working Paper Series 4972, The World Bank.
  3. Jean-Louis Combes & Christian Ebeke, 2011. "Remittances and Household Consumption Instability in Developing Countries," Working Papers halshs-00552245, HAL.
  4. Christian Hubert Ebeke, 2011. "Remittances, Countercyclicality, Openness and Government Size," Recherches économiques de Louvain, De Boeck Université, vol. 77(4), pages 89-114.
  5. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  6. Antonio David, 2010. "How Do International Financial Flows to Developing Countries Respond to Natural Disasters?," IMF Working Papers 10/166, International Monetary Fund.
  7. Frankel, Jeffrey, 2010. "Are Bilateral Remittances Countercylical?," Working Paper Series rwp10-037, Harvard University, John F. Kennedy School of Government.
  8. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
  9. Dalia Hakura & Ralph Chami & Peter Montiel, 2009. "Remittances," IMF Working Papers 09/91, International Monetary Fund.
  10. Era Dabla-Norris & Camelia Minoiu & Luis-Felipe Zanna, 2010. "Business Cycle Fluctuations, Large Shocks, and Development Aid," IMF Working Papers 10/240, International Monetary Fund.
  11. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  12. Ilene Grabel, 2009. "Remittances: Political Economy and Developmental Implications," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(4), pages 86-106, December.
  13. Roland Craigwell & Mahalia Jackman & Winston Moore, 2010. "Economic volatility and remittances," International Journal of Development Issues, Emerald Group Publishing, vol. 9(1), pages 25-42, April.
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