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Do Financial Flows raise or reduce Economic growth Volatility? Some Lessons from Moroccan case

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  • Bouoiyour, Jamal
  • Miftah, Amal
  • Selmi, Refk

Abstract

The purpose of the paper is twofold. Firstly, it attempts to analyze accurately the volatility of economic growth and financial flows (i.e. remittances and FDI) in the case of Morocco. Secondly, it tries to address the possible effects of these financial flows on the economic growth. We provide evidence that remittances are less volatile than FDI in terms of duration of persistence, intensity of shock and the “volatility clustering”. Furthermore, remittances can smooth the volatility of growth, while FDI flows sustain and aggravate it. Altruistic foundations, counter-cyclicality and concentration of remittances in Europe have been advanced as elements of explanation of these outcomes. Similarly, foreign investors seeking only profits have a pro-cyclical behavior and are greatly sensitive to economic conditions in the country of origin.

Suggested Citation

  • Bouoiyour, Jamal & Miftah, Amal & Selmi, Refk, 2014. "Do Financial Flows raise or reduce Economic growth Volatility? Some Lessons from Moroccan case," MPRA Paper 57258, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57258
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    Cited by:

    1. Aisha Tauqir & Muhammad Tariq Majeed & Sadaf Kashif, 2022. "Foreign Direct Investment and Output Volatility Nexus: A Global Analysis," Foreign Trade Review, , vol. 57(3), pages 283-309, August.
    2. Aisha Tauqir & Muhammad Tariq Majeed, 2021. "Remittances and Output Volatility: The Role of Financial Development," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 26(2), pages 77-110, July-Dec.
    3. Jamal Bouoiyour & Amal Miftah, 2015. "Why do migrants remit? Testing hypotheses for the case of Morocco," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-20, December.

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    More about this item

    Keywords

    Economic growth volatility; Remittances; FDI; GARCH models.;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G0 - Financial Economics - - General

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