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Remittances over the Business Cycle: Theory and Evidence

Author

Listed:
  • Supriyo De

    () (The World Bank)

  • Ergys Islamaj

    () (The World Bank)

  • Ayhan Kose

    () (The World Bank)

  • S. Reza Yousefi

    () (IMF)

Abstract

This paper examines the behavior of remittances over the business cycle and their potential to act as a stabilizer during periods of high business cycle volatility. Four main findings are reported. First, in theory, the cyclical behavior of remittances depends on the motives to remit. Second, remittances are less volatile than other foreign currency flows but do not appear to systemically co-move with business cycle fluctuations. Third, remittances are relatively stable even during episodes of sharp business cycle volatility, such as those associated with sudden stops and financial crises. Finally, remittances can help support consumption stability over the business cycle.

Suggested Citation

  • Supriyo De & Ergys Islamaj & Ayhan Kose & S. Reza Yousefi, 2016. "Remittances over the Business Cycle: Theory and Evidence," Koç University-TUSIAD Economic Research Forum Working Papers 1601, Koc University-TUSIAD Economic Research Forum.
  • Handle: RePEc:koc:wpaper:1601
    as

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    File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1601.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Kimberly Beaton & Svetlana Cerovic & Misael Galdamez & Metodij Hadzi-Vaskov & Franz Loyola & Zsoka Koczan & Bogdan Lissovolik & Jan Kees Martijn & Yulia Ustyugova & Joyce Wong, 2017. "Migration and Remittances in Latin America and the Caribbean; Engines of Growth and Macroeconomic Stabilizers?," IMF Working Papers 17/144, International Monetary Fund.

    More about this item

    Keywords

    remittances; business cycles; acyclical; sudden stops; risk sharing.;

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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