Output growth volatility and remittances
Since output growth volatility has negative effects on growth, poverty and welfare, especially in poorer countries, it is crucial to identify the country-specific factors that affect it. The empirical literature has focused mostly on financial development, policy distortions and globalization variables. Among the latter, attention has been directed in particular to trade and financial openness. We contribute to this literature by adding what we see as the missing globalization variable, the one related to the increasingly important phenomenon of international migrations, namely emigrants' remittances. Remittances can help reduce output growth volatility thanks to their considerable magnitude, stability and low pro-cyclicality. Applying an empirical framework taken from the existing literature to a sample of about 60 emerging and developing economies over the period 1980-2003, we provide robust evidence that remittances are negatively correlated to output growth volatility. Instrumental variable estimation supports our intuition about the direction of causality.
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- Dean Yang, 2006.
"International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks,"
NBER Working Papers
12325, National Bureau of Economic Research, Inc.
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- Adams, Richard H. Jr., 2005. "Remittances, household expenditure and investment in Guatemala," Policy Research Working Paper Series 3532, The World Bank.
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"The Economics of Migrants' Remittances,"
Handbook on the Economics of Giving, Reciprocity and Altruism,
- Richard H. Adams, Jr. & John Page, 2003. "International migration, remittances, and poverty in developing countries," Policy Research Working Paper Series 3179, The World Bank.
- Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
- Claudia Martínez Alvear & Dean Yang, 2007. "Remittances and Poverty in Migrants’ Home Areas: Evidence from the Philippines," Working Papers wp257, University of Chile, Department of Economics.
- Giuliano, Paola & Ruiz-Arranz, Marta, 2006.
"Remittances, Financial Development, and Growth,"
IZA Discussion Papers
2160, Institute for the Study of Labor (IZA).
- David McKenzie & Hillel Rapoport, 2006. "Migration and education inequality in rural Mexico," INTAL Working Papers 1446, Inter-American Development Bank, INTAL.
- Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr., 2005.
"Remittances, Inequality and Poverty: Evidence from Rural Mexico,"
2005 Annual meeting, July 24-27, Providence, RI
19245, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005. "Remittances, Inequality and Poverty: Evidence from Rural Mexico," Working Papers 60287, University of California, Davis, Department of Agricultural and Resource Economics.
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