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The effect of remittances prior to an election

  • Jean-Louis COMBES

    ()

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Mathilde MAUREL

    ()

  • Christian EBEKE

    ()

This paper focuses on the relationships between remittances, elections, and government consumption as a percentage of GDP. We combine data from the National Elections across Democracy and Autocracy (NELDA) dataset compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators dataset. We focus on 70 young democracies in the developing world. The period under investigation is 1990-2010. The main objective of the paper is to assess whether remittances have an influence on the political manipulation, which may occur prior to an election, through in increase in the government consumption-to-GDP-ratio. It appears that remittances dampen the political business cycle (PBC). Furthermore, the PBC is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7 percent of GDP. Those findings are robust to different econometric strategies and robustness checks.

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Paper provided by CERDI in its series Working Papers with number 201307.

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Length: 23
Date of creation: 2013
Date of revision:
Publication status: Published in Applied Economics, 2015, pages 4074-4089
Handle: RePEc:cdi:wpaper:1430
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  17. Yasser Abdih & Jihad Dagher & Peter Montiel, 2010. "Remittances and Institutions: Are Remittances a Curse?," Center for Development Economics 2010-08, Department of Economics, Williams College.
  18. Agarwal, Reena & Horowitz, Andrew W., 2002. "Are International Remittances Altruism or Insurance? Evidence from Guyana Using Multiple-Migrant Households," World Development, Elsevier, vol. 30(11), pages 2033-2044, November.
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  21. Masten, Arjana Brezigar & Coricelli, Fabrizio & Masten, Igor, 2008. "Non-linear growth effects of financial development: Does financial integration matter?," Journal of International Money and Finance, Elsevier, vol. 27(2), pages 295-313, March.
  22. Frederic DOCQUIER & Elisabetta LODIGIANI & Hillel RAPOPORT & Maurice SCHIFF, 2010. "Emigration and the quality of home country institutions," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  23. Pfutze, Tobias, 2012. "Does migration promote democratization? Evidence from the Mexican transition," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 159-175.
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