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Remittances and vulnerability in developing countries

Author

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  • Giulia Bettin

    () (Universit… Politecnica delle Marche, MoFiR)

  • Andrea Filippo Presbitero

    () (International Monetary Fund, Universit… Politecnica delle Marche - MoFiR)

  • Nikola Spatafora

    () (The World Bank)

Abstract

This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 107 developing countries over the period 2005-2011. We find that remittances are negatively correlated with the business cycle in recipient countries, and increase especially strongly in response to adverse exogenous shocks, such as natural disasters or large declines in the terms of trade. Remittances are also positively correlated with economic conditions in the source province. Nevertheless, in the presence of similar negative shocks to both source and recipient economies, remittances remain counter-cyclical with respect to the recipient country.

Suggested Citation

  • Giulia Bettin & Andrea Filippo Presbitero & Nikola Spatafora, 2014. "Remittances and vulnerability in developing countries," Mo.Fi.R. Working Papers 93, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:93
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    1. repec:taf:jdevst:v:54:y:2018:i:3:p:481-500 is not listed on IDEAS
    2. Elias K Shukralla, 2016. "Remittances, institutions and economic growth: a closer look at some proxies for institutions," Economics Bulletin, AccessEcon, vol. 36(1), pages 298-312.
    3. Giulia Bettin & Alberto Zazzaro, 2018. "The Impact of Natural Disasters on Remittances to Low- and Middle-Income Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 54(3), pages 481-500, March.
    4. Michael Clemens and David McKenzie, 2014. "Why Don't Remittances Appear to Affect Growth? - Working Paper 366," Working Papers 366, Center for Global Development.
    5. Bredtmann, Julia & Martínez Flores, Fernanda & Otten, Sebastian, 2018. "Remittances and the Brain Drain: Evidence from Microdata for Sub-Saharan Africa," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 1-22.
    6. repec:ces:ifodic:v:14:y:2016:i:3:p:19255710 is not listed on IDEAS
    7. Izza Mafruhah, 2016. "The Placement Model for Indonesian Migrant Workers to Improve their Economic Welfare," GATR Journals jber116, Global Academy of Training and Research (GATR) Enterprise.
    8. Giacomo Oddo & Maurizio Magnani & Riccardo Settimo & Simonetta Zappa, 2016. "Remittances of foreign workers in Italy: an estimation of invisible flows in the "informal channel"," Questioni di Economia e Finanza (Occasional Papers) 332, Bank of Italy, Economic Research and International Relations Area.
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    17. repec:onb:oenbfi:y:2017:i:2:b:2 is not listed on IDEAS
    18. 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.
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    More about this item

    Keywords

    Business Cycle; Gravity Model; Remittances; Shocks; Vulnerability;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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