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Are Remittances Manna From Heaven? A Look at the Business Cycle Properties of Remittances

  • Carlos Vargas-Silva

    ()

    (Department of Economics and International Business, Sam Houston State University)

This article documents the business cycle properties of workers’ remittance flows to Mexico. We also discuss key differences between the cyclical properties of remittance inflows and the cyclical properties of foreign direct investment (FDI). We find evidence that remittances are countercyclical with respect to Mexico’s business cycle. However, this result is not robust to the use of different measures of remittances. The lack of a robust relationship between remittances and Mexico’s business cycle, suggests that the use of remittances to smooth cyclical fluctuations in output may not be a straightforward strategy.

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File URL: http://www.shsu.edu/%7Etcq001/paper_files/wp09-05_paper.pdf
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Paper provided by Sam Houston State University, Department of Economics and International Business in its series Working Papers with number 0905.

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Date of creation: Apr 2009
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Handle: RePEc:shs:wpaper:0905
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  1. 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.
  2. Pallage, Stephane & Robe, Michel A, 2001. "Foreign Aid and the Business Cycle," Review of International Economics, Wiley Blackwell, vol. 9(4), pages 641-72, November.
  3. Ziesemer, Thomas, 2006. "Worker Remittances and Growth: The Physical and Human Capital Channels," MERIT Working Papers 020, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  4. Ernesto López Córdova, 2004. "Globalization, Migration and Development: The Role of Mexican Migrant Remittances," Econometric Society 2004 Latin American Meetings 82, Econometric Society.
  5. James Love & Francisco Lage-Hidalgo, 2000. "Analysing the determinants of US direct investment in Mexico," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1259-1267.
  6. Torres, Alberto & Vela, Oscar, 2003. "Trade integration and synchronization between the business cycles of Mexico and the United States," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 319-342, December.
  7. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
  8. Agarwal, Reena & Horowitz, Andrew W., 2002. "Are International Remittances Altruism or Insurance? Evidence from Guyana Using Multiple-Migrant Households," World Development, Elsevier, vol. 30(11), pages 2033-2044, November.
  9. Marianne Baxter & Robert G. King, 1995. "Measuring Business Cycles Approximate Band-Pass Filters for Economic Time Series," NBER Working Papers 5022, National Bureau of Economic Research, Inc.
  10. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, December.
  11. Ewa Gradzka & Shaun K. Roache, 2007. "Do Remittances to Latin America Dependon the U.S. Business Cycle?," IMF Working Papers 07/273, International Monetary Fund.
  12. Catalina Amuedo-Dorantes & Susan Pozo, 2006. "Remittances as insurance: evidence from Mexican immigrants," Journal of Population Economics, Springer, vol. 19(2), pages 227-254, June.
  13. Chiquiar, Daniel & Ramos-Francia, Manuel, 2005. "Trade and business-cycle synchronization: evidence from Mexican and U.S. manufacturing industries," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 187-216, August.
  14. Stephane Pallage & Michel A. Robe, 2003. "On the Welfare Cost of Economic Fluctuations in Developing Countries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 677-698, 05.
  15. Carlos Vargas-Silva & Peng Huang, 2005. "Macroeconomic Determinants of Workers’ Remittances: Host vs. Home Country’s Economic Conditions," International Finance 0507007, EconWPA, revised 29 Jul 2005.
  16. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
  17. de la Briere, Benedicte & Sadoulet, Elisabeth & de Janvry, Alain & Lambert, Sylvie, 2002. "The roles of destination, gender, and household composition in explaining remittances: an analysis for the Dominican Sierra," Journal of Development Economics, Elsevier, vol. 68(2), pages 309-328, August.
  18. Borraz Fernando, 2005. "Assessing the Impact of Remittances on Schooling: the Mexican Experience," Global Economy Journal, De Gruyter, vol. 5(1), pages 1-32, April.
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