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Remittances, financing constraints and growth volatility : Do remittances dampen or magnify shocks ?

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  • Dramane Coulibaly

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper studies empirically the link between remittances and growth volatility by examining the impact of remittances on the propagation of real and monetary shocks. This study is conducted by employing dynamic panel generalized method of moment (GMM) technique for a sample of 63 countries over the 1980-2004 period. The volatility of terms of trade and inflation is used to proxy for real and monetary volatility, respectively. The results show that the impact of remittances on the propagation of shocks depends on the nature of shock. Precisely, the results show that remittances dampen the effect of terms of trade volatility, but, magnify the effect of inflation volatility. The results also suggest that the dampening effect of remittances on propagation of terms of trade volatility is greater in country with high level of financial development.

Suggested Citation

  • Dramane Coulibaly, 2009. "Remittances, financing constraints and growth volatility : Do remittances dampen or magnify shocks ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00384483, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00384483 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00384483
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    References listed on IDEAS

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    1. Mark Craddock & David Heath & Eckhard Platen, 1999. "Numerical Inversion of Laplace Transforms: A Survey of Techniques with Applications to Derivative Pricing," Research Paper Series 27, Quantitative Finance Research Centre, University of Technology, Sydney.
    2. Philippe Artzner & Freddy Delbaen & Jean-Marc Eber & David Heath, 1999. "Coherent Measures of Risk," Mathematical Finance, Wiley Blackwell, vol. 9(3), pages 203-228.
    3. Grübel, Rudolf & Hermesmeier, Renate, 1999. "Computation of Compound Distributions I: Aliasing Errors and Exponential Tilting," ASTIN Bulletin: The Journal of the International Actuarial Association, Cambridge University Press, vol. 29(02), pages 197-214, November.
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