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Fiscal Sustainability in Remittance-Dependent Economies

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  • Mr. Ralph Chami
  • Mr. Yasser Abdih
  • Mr. Amine Mati
  • Michael T. Gapen

Abstract

We investigate the impact of remittances on public debt sustainability and detail how the traditional debt-to-GDP ratio can be modified to create a more accurate representation of debt sustainability for a country that receives significant remittance inflows. The main result is that inclusion of remittances into the traditional debt sustainability analysis alters the amount of fiscal adjustment required to place debt on a sustainable path. While preliminary, these results are indicative of how a one-size-fits-all stability analysis may be inappropriate when evaluating the stance of fiscal policy for countries with different balance of payments characteristics.

Suggested Citation

  • Mr. Ralph Chami & Mr. Yasser Abdih & Mr. Amine Mati & Michael T. Gapen, 2009. "Fiscal Sustainability in Remittance-Dependent Economies," IMF Working Papers 2009/190, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/190
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    References listed on IDEAS

    as
    1. Connel Fullenkamp & Mr. Thomas F. Cosimano & Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 2008/001, International Monetary Fund.
    2. 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.
    3. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, vol. 79(1), pages 102-116, September.
    4. International Monetary Fund, 2009. "Lebanon: Report on Performance Under the Program Supported by Emergency Post-Conflict Assistance," IMF Staff Country Reports 2009/313, International Monetary Fund.
    5. Michael T. Gapen & Mr. Thomas F. Cosimano & Mr. Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts: Optimal Fiscal and Monetary Policy in the Presence of Remittances," IMF Working Papers 2006/061, International Monetary Fund.
    6. Michael Gapen & Thomas Cosimano & Ralph Chami, 2006. "Optimal Fiscal and Monetary Policy in the Presence of Remittances," Computing in Economics and Finance 2006 34, Society for Computational Economics.
    7. Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 2009/153, International Monetary Fund.
    8. International Monetary Fund, 2009. "Lebanon: Report on Performance Under the Program Supported by Emergency Post-Conflict Assistance," IMF Staff Country Reports 2009/213, International Monetary Fund.
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    Cited by:

    1. Christian EBEKE, 2010. "Remittances, Value Added Tax and Tax Revenue in Developing Countries," Working Papers 201030, CERDI.
    2. Mthuli Ncube & Zuzana Brixiova, 2013. "Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa," Working Paper Series 996, African Development Bank.
    3. Godfrey I. Ihedimma & Godstime I. Opara, 2020. "Remittance Inflow and Unemployment in Nigeria," Working Papers 20/103, European Xtramile Centre of African Studies (EXCAS).
    4. Mr. Yasser Abdih & Mr. Ralph Chami & Mr. Christian H Ebeke & Mr. Adolfo Barajas, 2012. "Remittances Channel and Fiscal Impact in the Middle East, North Africa, and Central Asia," IMF Working Papers 2012/104, International Monetary Fund.
    5. Gnangnon, Sèna Kimm, 2014. "The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries," World Development, Elsevier, vol. 54(C), pages 168-190.
    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. Godfrey I. Ihedimma & Godstime I. Opara, 2020. "Remittance Inflow and Unemployment in Nigeria," Working Papers of the African Governance and Development Institute. 20/103, African Governance and Development Institute..
    8. Hippolyte Wenéyam Balima & Jean‐Louis Combes, 2019. "Remittances and bond yield spreads in emerging market economies," Review of International Economics, Wiley Blackwell, vol. 27(1), pages 448-467, February.
    9. Godfrey I. Ihedimma & Godstime I. Opara, 2020. "Remittance Inflow and Unemployment in Nigeria," Research Africa Network Working Papers 20/103, Research Africa Network (RAN).
    10. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.

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