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Are Foreign Aid and Remittance Inflows a Hedge Against Food Price Shocks?



This paper explores the role of foreign aid and remittance inflows in the mitigation of the effects of food price shocks. Using a large sample of developing countries and mobilising dynamic panel data specifications, the econometric results yield two important findings. First, remittance and aid inflows significantly dampen the effect of food price shocks in the most vulnerable countries. Second, a lower remittance-to-GDP ratio is required in order to fully absorb the effects of food price shocks compared to the corresponding aid-to-GDP ratio.

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  • International Monetary Fund, 2012. "Are Foreign Aid and Remittance Inflows a Hedge Against Food Price Shocks?," IMF Working Papers 12/67, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/67

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    References listed on IDEAS

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    13. Ilene Grabel, 2009. "Remittances: Political Economy and Developmental Implications," International Journal of Political Economy, Taylor & Francis Journals, vol. 38(4), pages 86-106.
    14. Roland Craigwell & Mahalia Jackman & Winston Moore, 2010. "Economic volatility and remittances," International Journal of Development Issues, Emerald Group Publishing, vol. 9(1), pages 25-42, April.
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    More about this item


    Aid; Household consumption; Foreign aid; Remittances; food price shocks; vulnerability; food price; remittance; remittance inflows; food imports; International Factor Movements and International Business: General; Saving;

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