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Remittances and their Macroeconomic Impact

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  • Mthuli Ncube
  • Zuzana Brixiova

Abstract

This paper examines the macroeconomic trends, drivers and the impact of remittances in Africa. First, it documents the increasing share of remittances relative to other foreign capital flows to Africa, the distribution of remittance inflows across countries, and some key properties. This is followed by an analysis of the macroeconomic drivers of remittances in recipient countries, such as the level of income, inflation and nominal exchange rate depreciation. Specifically, remittances are positively impacted by higher income, but deterred by an unstable macroeconomic environment, pointing to the investment motive in remitting to Africa. The paper also examines the role of remittances in funding Africa’s external balances. Finally, drawing on the case of Egypt, the paper shows the positive impact that rising remittances can have on public debt sustainability.

Suggested Citation

  • Mthuli Ncube & Zuzana Brixiova, 2013. "Remittances and their Macroeconomic Impact," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 14(4), pages 1-20, October.
    • Handle: RePEc:wej:wldecn:569
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    Cited by:

    1. Haruna, Issahaku & Harvey, Simon K. & Abor, Joshua Y., 2016. "Does development finance pose an additional risk to monetary policy?," MPRA Paper 101637, University Library of Munich, Germany, revised 10 Jul 2016.
    2. Mokhtar Benlamine & Mr. Ales Bulir & Meryem Farouki & Ágnes Horváth & Faical Hossaini & Hasnae El Idrissi & Zineb Iraoui & Mihály Kovács & Mr. Douglas Laxton & Anass Maaroufi & Katalin Szilágyi & Moha, 2018. "Morocco: A Practical Approach to Monetary Policy Analysis in a Country with Capital Controls," IMF Working Papers 2018/027, International Monetary Fund.
    3. Eberechukwu Uneze & Adedeji Adeniran, 2014. "Exploring Domestic Financing Options for Post-2015 Development Agenda in Selected Sub-Saharan African Countries," Southern Voice Occasional Paper 18, Southern Voice.
    4. Dorsaf Sridi & Wafa Ghardallou, 2021. "Remittances and disaggregated country risk ratings in Tunisia: an ARDL approach," Middle East Development Journal, Taylor & Francis Journals, vol. 13(1), pages 191-211, January.
    5. Tut, Daniel, 2023. "FinTech and the COVID-19 pandemic: Evidence from electronic payment systems," Emerging Markets Review, Elsevier, vol. 54(C).

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