IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/12-251.html
   My bibliography  Save this paper

Workers’ Remittances; An Overlooked Channel of International Business Cycle Transmission?

Author

Listed:
  • Adolfo Barajas
  • Ralph Chami
  • Christian H Ebeke
  • Sampawende J Tapsoba

Abstract

This paper shows that remittance flows significantly increase the business cycle synchronization between remittance-recipient countries and the rest of the world. Using both aggregate and bilateral remittances data in a panel data setting, the study demonstrates that this effect is robust and causal. Moreover, the econometric analysis reveals that remittance flows are more effective in channeling economic downturns than upswings from the sending countries to remittance-receiving economies. The analysis suggests that measures of openness and spillovers could be enhanced by accounting for the role of the remittances channel.

Suggested Citation

  • Adolfo Barajas & Ralph Chami & Christian H Ebeke & Sampawende J Tapsoba, 2012. "Workers’ Remittances; An Overlooked Channel of International Business Cycle Transmission?," IMF Working Papers 12/251, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/251
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=40056
    Download Restriction: no

    References listed on IDEAS

    as
    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
    2. S. Jules-Armand Tapsoba, 2009. "Trade Intensity and Business Cycle Synchronicity in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(2), pages 287-318, March.
    3. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    4. Markus Brückner, 2013. "On the simultaneity problem in the aid and growth debate," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 126-150, January.
    5. Beine, Michel & Lodigiani, Elisabetta & Vermeulen, Robert, 2012. "Remittances and financial openness," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 844-857.
    6. Christian Hubert Ebeke, 2011. "Remittances, Countercyclicality, Openness and Government Size," Recherches économiques de Louvain, De Boeck Université, vol. 77(4), pages 89-114.
    7. Javorcik, Beata S. & Özden, Çaglar & Spatareanu, Mariana & Neagu, Cristina, 2011. "Migrant networks and foreign direct investment," Journal of Development Economics, Elsevier, vol. 94(2), pages 231-241, March.
    8. Jean Imbs, 2004. "Trade, Finance, Specialization, and Synchronization," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 723-734, August.
    9. M. Ayhan Kose & Eswar S. Prasad & Marco E. Terrones, 2003. "How Does Globalization Affect the Synchronization of Business Cycles?," American Economic Review, American Economic Association, vol. 93(2), pages 57-62, May.
    10. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    11. Combes, Jean-Louis & Ebeke, Christian, 2011. "Remittances and Household Consumption Instability in Developing Countries," World Development, Elsevier, vol. 39(7), pages 1076-1089, July.
    12. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    13. Calderon, Cesar & Chong, Alberto & Stein, Ernesto, 2007. "Trade intensity and business cycle synchronization: Are developing countries any different?," Journal of International Economics, Elsevier, vol. 71(1), pages 2-21, March.
    14. Clark, Todd E. & van Wincoop, Eric, 2001. "Borders and business cycles," Journal of International Economics, Elsevier, vol. 55(1), pages 59-85, October.
    15. Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1-2), pages 701-709, January.
    16. Nathan Nunn & Leonard Wantchekon, 2011. "The Slave Trade and the Origins of Mistrust in Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3221-3252, December.
    17. Abdih, Yasser & Chami, Ralph & Dagher, Jihad & Montiel, Peter, 2012. "Remittances and Institutions: Are Remittances a Curse?," World Development, Elsevier, vol. 40(4), pages 657-666.
    18. Yasser Abdih & Ralph Chami & Christian H Ebeke & Adolfo Barajas, 2012. "Remittances Channel and Fiscal Impact in the Middle East, North Africa, and Central Asia," IMF Working Papers 12/104, International Monetary Fund.
    19. Maurice Kugler & Hillel Rapoport, 2011. "Migration, FDI and the Margins of Trade," CID Working Papers 222, Center for International Development at Harvard University.
    20. Flood, Robert P. & Rose, Andrew K., 2010. "Inflation targeting and business cycle synchronization," Journal of International Money and Finance, Elsevier, vol. 29(4), pages 704-727, June.
    21. Jeffrey Frankel, 2011. "Are Bilateral Remittances Countercyclical?," Open Economies Review, Springer, vol. 22(1), pages 1-16, February.
    22. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
    23. Rose, Andrew K & Engel, Charles, 2002. "Currency Unions and International Integration," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(4), pages 1067-1089, November.
    24. Christian Hubert Ebeke, 2011. "Do Remittances Lead to a Public Moral Hazard in Developing Countries? An Empirical Investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 48(8), pages 1009-1025, May.
    25. Cerqueira, Pedro André & Martins, Rodrigo, 2009. "Measuring the determinants of business cycle synchronization using a panel approach," Economics Letters, Elsevier, vol. 102(2), pages 106-108, February.
    26. Nicholas P. Glytsos, 2005. "The contribution of remittances to growth: A dynamic approach and empirical analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 32(5), pages 468-496, October.
    27. Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
    28. Frankel, Jeffrey A. & Rose, Andrew K., 1997. "Is EMU more justifiable ex post than ex ante?," European Economic Review, Elsevier, vol. 41(3-5), pages 753-760, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mthuli Ncube & Zuzana Brixiova, 2013. "Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa," Working Paper Series 996, African Development Bank.
    2. 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.
    3. Kimberly Beaton & Serhan Cevik & Reza Yousefi, 2017. "Smooth Operator: Remittances and Fiscal Shocks," IMF Working Papers 17/165, International Monetary Fund.
    4. Adolfo Barajas & Ralph Chami & Christian H Ebeke & Anne Oeking, 2016. "What’s Different about Monetary Policy Transmission in Remittance-Dependent Countries?," IMF Working Papers 16/44, International Monetary Fund.
    5. Aliaa Nabil Khodeir, 2015. "Migration Remittances Inflows and Macroeconomic Shocks: The Case of Egypt," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 1001-1010.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:12/251. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi). General contact details of provider: http://edirc.repec.org/data/imfffus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.