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Remittances in Russia and Caucasus and Central Asia: the Gravity Model

Author

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  • Mr. Tigran Poghosyan

Abstract

Remitances are an important source of external financing in low- and middle-income countries. This paper uses the gravity model to analyze remittance flows in Russia and Caucasus and Central Asia (CCA) countries. Standard gravity determinants, such as GDP in sending and recieiving countries, bilateral distance, existence of common borders and common official language, fit remittance flows well. Remittances also react to inflation and exchange rate movements in recipient countries to sustain their purchasing power. In line with the altruism hypothesis, remittances flow to countries with higher age dependency ratio. Remittances are countercyclical and help stabilize outputs in recipient countries. However, global shocks resulting in sharp output losses of sending countries would lead to large volatility and decline of remittance inflows in recipient countries. The results of the analysis can be used to assess the impact of the COVID-19 shock on projected remittance flows into CCA.

Suggested Citation

  • Mr. Tigran Poghosyan, 2020. "Remittances in Russia and Caucasus and Central Asia: the Gravity Model," IMF Working Papers 2020/128, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/128
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    Cited by:

    1. Luca Pieroni & Melcior Rossello Roig, 2024. "The effect of obtaining EU citizenship in former transition economies on remittance flows," The World Economy, Wiley Blackwell, vol. 47(6), pages 2361-2399, June.
    2. Kijin Kim & Zemma Ardaniel & Aiko Kikkawa & Benjamin Endriga, 2022. "Bilateral Remittance Inflows to Asia and the Pacific: Countercyclicality and Motivations to Remit," ADBI Working Papers 1315, Asian Development Bank Institute.
    3. Angana Parashar SARMA & Muniyor KRISHNA, 2024. "Causal Nexus Between Remittance Inflow And Its Determinants, 1998-2020: Evidence From The South And Southeast Asian Lmics," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 24(1), pages 97-120.
    4. David Roland-Holst & Kamalbek Karymshakov & Burulcha Sulaimanova & Kadyrbek Sultakeev, 2022. "ICT, Online Search Behavior, and Remittances: Evidence from the Kyrgyz Republic," ADBI Working Papers 1348, Asian Development Bank Institute.
    5. Laurent Bossavie & Daniel Garrote Sánchez & Mattia Makovec, 2024. "The Journey Ahead," World Bank Publications - Books, The World Bank Group, number 42224, April.
    6. Mirco Balatti & M. Ayhan Kose & Kate McKinnon & Edoardo Palombo & Naotaka Sugawara & Guillermo Verduzco-Bustos & Dana Vorisek, 2025. "From Tailwinds to Headwinds: Emerging and Developing Economies in the Twenty-First Century," CAMA Working Papers 2025-44, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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