Do Worker Remittances Reduce Output Volatility in Developing Countries?
AbstractRemittance inflows have increased considerably in recent years and are large relative to the size of many recipient economies. The theoretical and empirical effects of remittance inflows on output growth volatility are, however, ambiguous. On the one hand, remittances have been a remarkably stable source of income, relative to other private and public flows, and they seem to be compensatory in nature, rising when the home country’s economy suffers a downturn. On the other hand, the labor supply effects induced by altruistic remittances could cause the output effects associated with technology shocks to be magnified. This paper finds robust evidence for a sample of 70 remittance-recipient countries, including 16 advanced economies and 54 developing countries that remittances have a negative effect on output growth volatility, thereby supporting the notion that remittance flows are a stabilizing influence on output.
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Bibliographic InfoPaper provided by Department of Economics, Williams College in its series Center for Development Economics with number 2010-01.
Length: 38 pages
Date of creation: Oct 2010
Date of revision:
Other versions of this item:
- Chami Ralph & Hakura Dalia S. & Montiel Peter J., 2012. "Do Worker Remittances Reduce Output Volatility in Developing Countries?," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-25, June.
- Ralph Chami & Dalia Hakura & Peter Montiel, 2010. "Do Worker Remittances Reduce Output Volatility in Developing Countries?," Department of Economics Working Papers 2010-17, Department of Economics, Williams College.
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- F24 - International Economics - - International Factor Movements and International Business - - - Remittances
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-DEV-2011-03-05 (Development)
- NEP-LAM-2011-03-05 (Central & South America)
- NEP-MIG-2011-03-05 (Economics of Human Migration)
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