Remittances and the Macroeconomy: The Case of Small Island Developing States
In this paper we examine how remittances relate to the exchange rate, natural disasters and foreign aid in developing economies. By using panel VAR methods we are able to compensate for both data limitations and endogeneity among variables. We find that while foreign aid tends to appreciate the real exchange rate, remittances do not have the same impact. We also detect an inverse relationship between the real exchange rate and remittance amounts, with real exchange rate depreciation increasing remittance inflows. Of particular interest is the observation that the Small Island Developing States (SIDS) subsample of countries behave differently from the full sample of Developing Countries (DC) in a number of ways. Of note is the differing impact of disaster shocks on the real exchange rate and on the level of remittances across the two samples.
|Date of creation:||Jan 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (619) 594-1675
Fax: (619) 594-5062
Web page: http://www-rohan.sdsu.edu/dept/econ/e1.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vlad Pavlov & Craig Sugden, 2006. "Aid and Growth in the Pacific Islands," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 20, pages 38-55, November.
- repec:idb:brikps:79930 is not listed on IDEAS
- Funkhouser, Edward, 1992. "Migration from Nicaragua: some recent evidence," World Development, Elsevier, vol. 20(8), pages 1209-1218, August.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Younger, Stephen D., 1992. "Aid and the Dutch disease: Macroeconomic management when everybody loves you," World Development, Elsevier, vol. 20(11), pages 1587-1597, November.
- Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Migration, Remittances, and Male and Female Employment Patterns," American Economic Review, American Economic Association, vol. 96(2), pages 222-226, May.
- Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
- Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittance Receipt and Business Ownership in the Dominican Republic," The World Economy, Wiley Blackwell, vol. 29(7), pages 939-956, 07.
- Love, Inessa & Zicchino, Lea, 2006. "Financial development and dynamic investment behavior: Evidence from panel VAR," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 190-210, May.
- Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988.
"Estimating Vector Autoregressions with Panel Data,"
Econometric Society, vol. 56(6), pages 1371-95, November.
- Tom Doan, . "RATS program to demonstrate IV estimation of VAR in panel data," Statistical Software Components RTZ00185, Boston College Department of Economics.
- Faini, Riccardo, 1994. "Workers Remittances and the Real Exchange Rate: A Quantitative Framework," Journal of Population Economics, Springer, vol. 7(2), pages 235-45.
- Simon Gilchrist & Charles Himmelberg, 1999.
"Investment: Fundamentals and Finance,"
in: NBER Macroeconomics Annual 1998, volume 13, pages 223-274
National Bureau of Economic Research, Inc.
- Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
- Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
- Gitter, Seth R. & Barham, Bradford L., 2007. "Credit, Natural Disasters, Coffee, and Educational Attainment in Rural Honduras," World Development, Elsevier, vol. 35(3), pages 498-511, March.
- Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
- Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:sds:wpaper:0018. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ginger Shoulders)
If references are entirely missing, you can add them using this form.