Remittances, financing constraints growth volatility : Do remittances dampen or magnify shocks ?
AbstractThis paper studies empirically the link between remittances and growth volatility by examining the impact of remittances on the propagation of real and monetary shocks. This study is conducted by employing dynamic panel generalized method of moment (GMM) technique for a sample of 63 countries over the 1980-2004 period. The volatility of terms of trade and inflation is used to proxy for real and monetary volatility, respectively. The results show that the impact of remittances on the propagation of shocks depends on the nature of shock. Precisely, the results show that remittances dampen the effect of terms of trade volatility, but, magnify the effect of inflation volatility. The results also suggest that the dampening effect of remittances on propagation of terms of trade volatility is greater in country with high level of financial development.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 09024.
Length: 19 pages
Date of creation: Mar 2009
Date of revision:
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Remittances; financing constraints; volatility.;
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- F24 - International Economics - - International Factor Movements and International Business - - - Remittances
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-23 (All new papers)
- NEP-FDG-2009-05-23 (Financial Development & Growth)
- NEP-OPM-2009-05-23 (Open Economy Macroeconomics)
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