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International Business Cycles and Remittance Flows

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  • Mallick, Debdulal
  • Cooray, Arusha

Abstract

In this paper, we investigate the macroeconomic determinants and the effect of host country business cycles on remittance inflows. Estimating a dynamic panel data model by the system GMM, we document that remittance inflows are pro-cyclical to home country volatility but counter-cyclical to the volatility in host countries. This result does not hold for high income counties for which remittance inflows are acyclical to home country volatility but pro-cyclical to the volatility in host countries. For a host country, remittance outflows are counter-cyclical to the volatility of home countries. Trade openness is the single most important factor that determines both remittance inflows and outflows for the home and host countries, respectively.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25675.

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Date of creation: Aug 2010
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Handle: RePEc:pra:mprapa:25675

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Keywords: Remittance; volatility; international business cycle; dynamic panel data;

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  1. Vargas-Silva, Carlos, 2008. "Are remittances manna from heaven? A look at the business cycle properties of remittances," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 290-303, December.
  2. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
  3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  4. 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.
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  8. Donald Cox & Zekeriya Eser & Emmanuel Jimenez, 1996. "Motives for Private Transfers over the Life Cycle: An Analytical Framework and Evidence for Peru," Boston College Working Papers in Economics 327., Boston College Department of Economics.
  9. Richard H. Adams, Jr. & John Page, 2003. "International migration, remittances, and poverty in developing countries," Policy Research Working Paper Series 3179, The World Bank.
  10. Mahalia Jackman & Roland Craigwell & Winston Moore, 2009. "Economic volatility and remittances: evidence from SIDS," Journal of Economic Studies, Emerald Group Publishing, vol. 36(2), pages 135-146, May.
  11. Şule Akkoyunlu & Konstantin A. Kholodilin, 2008. "A Link Between Workers' Remittances and Business Cycles in Germany and Turkey," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 44(5), pages 23-40, September.
  12. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
  13. Serdar Sayan, 2004. "Guest Workers' Remittances and Output Fluctuations in Host and Home Countries : The Case of Remittances from Turkish Workers in Germany," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 40(6), pages 68-81, November.
  14. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  15. Dalia Hakura & Ralph Chami & Peter Montiel, 2009. "Remittances," IMF Working Papers 09/91, International Monetary Fund.
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Cited by:
  1. Giulia Bettin & Andrea Presbitero & Nicola Spatafora, 2014. "Remittances and Vulnerability in Developing Countries," IMF Working Papers 14/13, International Monetary Fund.

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