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Remittances, Business Cycles and Poverty: The Recent Turkish Experience

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Listed:
  • Sayan, Serdar
  • Tekin-Koru, Ayca

Abstract

We investigate whether remittances sent to Turkey by Turkish workers living in Germany are countercyclical or procyclical with Turkish and German national outputs and discuss the possible reasons underlying the resulting patterns and their implications. We also take up a previously unexplored issue and discuss poverty alleviation potential of remittances at a macroeconomic level by examining the statistical properties of any co-movements between remittances cycles and cycles in consumption spending on food and durable goods in Turkey. Our results reveal that the real remittance flows from Germany to Turkey move procyclically with the real output in Turkey, and are primarily driven by (largely independent of) the developments in the Turkish economy (German economy). We also find that remittances cycles remain procyclical to the consumption cycles throughout our sample period. This direct co-movement between the two cycles becomes synchronous, however, only after a phase shift occurring around 1992, pointing to the increasing role of the level of economic activity in Turkey as the leading determinant of remittance receipts from Germany and the declining strength of consumption smoothing motive over time. Our results all together point out a low potential for remittances sent from Germany to reduce poverty in Turkey, at least as far as the past fifteen years are concerned.

Suggested Citation

  • Sayan, Serdar & Tekin-Koru, Ayca, 2007. "Remittances, Business Cycles and Poverty: The Recent Turkish Experience," MPRA Paper 6029, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6029
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    References listed on IDEAS

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    Cited by:

    1. Balli, Faruk & Rana, Faisal, 2015. "Determinants of risk sharing through remittances," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 107-116.
    2. Mazhar Y. Mughal & Junaid Ahmed, 2014. "Remittances and Business Cycles: Comparison of South Asian Countries," International Economic Journal, Taylor & Francis Journals, vol. 28(4), pages 513-541, December.
    3. Bettin, Giulia & Paçacı Elitok, Seçil & Straubhaar, Thomas, 2012. "Causes and consequences of the downturn in financial remittances to Turkey: A descriptive approach," Edition HWWI: Chapters,in: Turkey, migration and the EU, pages 133-166 Hamburg Institute of International Economics (HWWI).
    4. Nedzad ISAKOVIC & Erkan ILGUN, 2015. "Cyclical Properties of Workers’ Remittances: Evidence from Bosnia and Herzegovina," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 172-187.
    5. Åule Akkoyunlu & Konstantin A. Kholodilin, 2008. "A Link Between Workers' Remittances and Business Cycles in Germany and Turkey," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 44(5), pages 23-40, September.
    6. Hulya Ulku, 2012. "Remitting Behaviour of Turkish Migrants: Evidence from Household Data in Germany," Urban Studies, Urban Studies Journal Limited, vol. 49(14), pages 3139-3158, November.
    7. Faruk Balli & Faisal Rana, 2014. "Determinants of risk sharing through remittances: cross-country evidence," CAMA Working Papers 2014-12, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    8. Ceyhun Bora Durdu & Serdar Sayan, 2010. "Emerging Market Business Cycles with Remittance Fluctuations," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 303-325, June.
    9. Gloria Clarissa O. Dzeha, 2016. "The decipher, theory or empirics: a review of remittance studies," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 113-134.
    10. Junaid Ahmed, 2012. "Cyclical Properties of Migrant's Remittances to Pakistan: What the data tell us," Economics Bulletin, AccessEcon, vol. 32(4), pages 3266-3278.
    11. Greg Ekpung Edame & Okoiarikpo Benjamin Okoi, 2015. "Fiscal Deficits and Economic Growth in Nigeria: A Chow Test Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 748-752.

    More about this item

    Keywords

    Remittances; International migration; Business cycles and poverty;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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