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Exchange-rate uncertainty and workers' remittances

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  • Matthew Higgins
  • Alketa Hysenbegasi
  • Susan Pozo

Abstract

A panel of nine Western Hemisphere nations is employed to test the proposition that the remittances of immigrants respond to risk variables, in particular to exchange-rate uncertainty. To estimate annual exchange-rate uncertainty, a nonparametric estimator based on monthly exchange rate returns is used. Also the instrumental variables procedure of Pagan and Ullah (Journal of Applied Econometrics, 3, 87-105, 1988) is employed to insure that the conclusions are robust to possible error in the measurement of exchange-rate uncertainty. The results give credence to the 'new economics of migration' approach which argues that immigrants are highly motivated by portfolio variables.

Suggested Citation

  • Matthew Higgins & Alketa Hysenbegasi & Susan Pozo, 2004. "Exchange-rate uncertainty and workers' remittances," Applied Financial Economics, Taylor & Francis Journals, vol. 14(6), pages 403-411.
  • Handle: RePEc:taf:apfiec:v:14:y:2004:i:6:p:403-411
    DOI: 10.1080/09603100410001673630
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    References listed on IDEAS

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    8. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
    9. Pagan, Adrian & Ullah, Aman, 1988. "The Econometric Analysis of Models with Risk Terms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(2), pages 87-105, April.
    10. Torben G. Andersen & Tim Bollerslev, 1998. "Deutsche Mark-Dollar Volatility: Intraday Activity Patterns, Macroeconomic Announcements, and Longer Run Dependencies," Journal of Finance, American Finance Association, vol. 53(1), pages 219-265, February.
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    Cited by:

    1. Isabel Ruiz & Carlos Vargas-Silva, 2010. "Another consequence of the economic crisis: a decrease in migrants' remittances," Applied Financial Economics, Taylor & Francis Journals, vol. 20(1-2), pages 171-182.
    2. Hasan, Mohammad Monirul, 2008. "The macroeconomic determinants of remittances in Bangladesh," MPRA Paper 27744, University Library of Munich, Germany, revised Sep 2010.
    3. Isabel Ruiz & Carlos Vargas-Silva, 2012. "Exploring the causes of the slowdown in remittances to Mexico," Empirical Economics, Springer, vol. 42(3), pages 745-766, June.
    4. Giulia Bettin & Andrea F. Presbitero & Nikola L. Spatafora, 2017. "Remittances and Vulnerability in Developing Countries," World Bank Economic Review, World Bank Group, vol. 31(1), pages 1-23.
    5. Francis M. Kemegue & Emmanuel Owusu-Sekyere & Reneé van Eyden, 2011. "What drives remittance inflows to Sub-Saharan Africa: A Dynamic Panel Approach," Working Papers 262, Economic Research Southern Africa.
    6. Åule 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.
    7. Sule Akkoyunlu & Konstantin A. Kholodilin, 2006. "What Affects the Remittances of Turkish Workers: Turkish or German Output?," Discussion Papers of DIW Berlin 622, DIW Berlin, German Institute for Economic Research.
    8. James Boyce & Léonce Ndikumana, 2008. "New Estimates of Capital Flight from Sub-Saharan African Countries: Linkages with External Borrowing and Policy Options," Working Papers wp166, Political Economy Research Institute, University of Massachusetts at Amherst.
    9. Catalina Amuedo-Dorantes & Susan Pozo, 2010. "Remittances and their Response to Portfolio Variables," CReAM Discussion Paper Series 1021, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    10. Adams Jr., Richard H., 2009. "The Determinants of International Remittances in Developing Countries," World Development, Elsevier, vol. 37(1), pages 93-103, January.
    11. Naheem Mahtab, 2015. "The Effect of Macroeconomic Variables on the Inflow of Remittance in Bangladesh," Economy, Asian Online Journal Publishing Group, vol. 2(1), pages 21-31.
    12. Sule Akkoyunlu, 2010. "Are Turkish Migrants Altruistic?," KOF Working papers 10-246, KOF Swiss Economic Institute, ETH Zurich.
    13. Carlos Vargas-Silva, 2009. "The Tale of Three Amigos: Remittances, Exchange Rates, and Money Demand in Mexico," Review of Development Economics, Wiley Blackwell, vol. 13(1), pages 1-14, February.
    14. Ebenezer A. Olubiyi & Kubrat O. Kehinde, 2015. "Does Exchange Rate Affect Remittances in Nigeria?," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 7(1), pages 031-045, June.
    15. Carlos Vargas-Silva & Peng Huang, 2006. "Macroeconomic determinantsof workers' remittances: Hostversus home country's economic conditions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 81-99.
    16. Deodat E. Adenutsi & Meshach J. Aziakpono & Matthew K. Ocran, 2011. "The Changing Impact Of Macroeconomic Environment On Remittance Inflows In Sub-Saharan Africa," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(2 (July)), pages 136-167.
    17. Kamel Jlassi, 2015. "Modelling and Forecasting of Tunisian Current Account: Aggregate versus Disaggregate Approach," IHEID Working Papers 13-2015, Economics Section, The Graduate Institute of International Studies.
    18. Díaz, Violeta & Soydemir, Gökçe, 2013. "Regional foreclosures and Mexican remittances: Evidence from the housing market crisis," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 74-86.
    19. Amuedo-Dorantes, Catalina & Pozo, Susan, 2012. "Remittances and Portfolio Values: An Inquiry Using Spanish Immigrants from Africa, Europe and the Americas," IZA Discussion Papers 6622, Institute for the Study of Labor (IZA).
    20. Imene Guetat & Dorsaf Sridi, 2014. "Institutional Quality Effect on Remittances in the MENA Region," Working Papers 864, Economic Research Forum, revised Nov 2014.
    21. Mirzosaid Sultonov, 2013. "The Macroeconomic Determinants of Remittance Flows from Russia to Tajikistan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(4), pages 417-430, March.
    22. repec:spr:portec:v:16:y:2017:i:3:d:10.1007_s10258-017-0136-y is not listed on IDEAS
    23. Amuedo-Dorantes, Catalina & Pozo, Susan, 2013. "Remittances and Portfolio Values: An Inquiry using Immigrants from Africa, Europe, and the Americas," World Development, Elsevier, vol. 41(C), pages 83-95.
    24. Niimi, Yoko & Ozden, Caglar, 2006. "Migration and remittances : causes and linkages," Policy Research Working Paper Series 4087, The World Bank.
    25. Adams, Richard H., Jr., 2008. "The demographic, economic and financial determinants of international remittances in developing countries," Policy Research Working Paper Series 4583, The World Bank.

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