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Home And Host Country Business Cycles And Remittances: The Case Of El Salvador And The Dominican Republic

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  • BORJA, Karla

Abstract

Remittances have become an effective source of balance of payment sustainability in several small countries in Latin America, and thus a particular concern among developmental economists is the source driving remittances into this region. This paper studies the properties and cyclical nature of remittances in El Salvador and the Dominican Republic, two countries with large per-capita remittance value in Latin America. Impulse-response functions are estimated to assess the effects that domestic GDP and US GDP have on remittances. The results evidence a counter-cyclical relationship between remittances and domestic output, corroborating the altruistic motive to remit. In addition, the US economy plays a key role in determining remittances in these countries, indicating that besides international trade and foreign direct investment, remittances further bind these nations to the US economy.

Suggested Citation

  • BORJA, Karla, 2013. "Home And Host Country Business Cycles And Remittances: The Case Of El Salvador And The Dominican Republic," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 101-118.
  • Handle: RePEc:eaa:aeinde:v:13:y:2013:i:2_8
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    References listed on IDEAS

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    Cited by:

    1. Mahalia JACKMAN, 2014. "Investigating the Business Cycle Properties of Remittances to the Caribbean," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(1), pages 87-100.
    2. Aliaa Nabil Khodeir, 2015. "Migration Remittances Inflows and Macroeconomic Shocks: The Case of Egypt," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 1001-1010.

    More about this item

    Keywords

    Remittances; business cycle; Vector Autoregression models; impulse response functions; El Salvador; Dominican Republic;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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