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, 2008.
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"Remittances, Financial Development, and Growth,"
IMF Working Papers
05/234, International Monetary Fund.
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- Taylor, J. Edward & Mora, Jorge & Adams, Richard H., Jr. & Lopez-Feldman, Alejandro, 2005.
"Remittances, Inequality and Poverty: Evidence from Rural Mexico,"
60287, University of California, Davis, Department of Agricultural and Resource Economics.
- 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).
- 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.
- Rapoport, Hillel & Docquier, Frédéric, 2005.
"The Economics of Migrants’ Remittances,"
IZA Discussion Papers
1531, Institute for the Study of Labor (IZA).
- Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
- McCormick, Barry & Wahba, Jackline, 2001. "Overseas Work Experience, Savings and Entrepreneurship amongst Return Migrants to LDCs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 164-78, May.
- David McKenzie & Hillel Rapoport, 2006. "Migration and education inequality in rural Mexico," INTAL Working Papers 1446, Inter-American Development Bank, INTAL.
- Adams Jr., Richard H. & Cuecuecha, Alfredo, 2010.
"Remittances, Household Expenditure and Investment in Guatemala,"
Elsevier, vol. 38(11), pages 1626-1641, November.
- 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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