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Remittances and the Macroeconomy: The Case of Small Island Developing States

Author

Listed:
  • Catalina Amuedo-Dorantes
  • Susan Pozo
  • Carlos Vargas-Silva

Abstract

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.

Suggested Citation

  • Catalina Amuedo-Dorantes & Susan Pozo & Carlos Vargas-Silva, 2007. "Remittances and the Macroeconomy: The Case of Small Island Developing States," WIDER Working Paper Series RP2007-22, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2007-22
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    File URL: https://www.wider.unu.edu/sites/default/files/rp2007-22.pdf
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    Citations

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    Cited by:

    1. Ilham Haouas & Naceur Kheraief & Arusha Cooray & Syed Jawad Hussain Shahzad, 2019. "Time-Varying Casual Nexuses Between Remittances and Financial Development in Some MENA Countries," Working Papers 1294, Economic Research Forum, revised 2019.
    2. Giulia Bettin & Andrea F. Presbitero & Nikola L. Spatafora, 2017. "Remittances and Vulnerability in Developing Countries," The World Bank Economic Review, World Bank, vol. 31(1), pages 1-23.
    3. Giulia Bettin & Alberto Zazzaro, 2018. "The Impact of Natural Disasters on Remittances to Low- and Middle-Income Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 54(3), pages 481-500, March.
    4. Deodat E. Adenutsi & Meshach J. Aziakpono & Matthew K. Ocran, 2011. "The Changing Impact Of Macroeconomic Environment On Remittance Inflows In Sub-Saharan Africa," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(2 (July)), pages 136-167.
    5. Díaz, Violeta & Soydemir, Gökçe, 2013. "Regional foreclosures and Mexican remittances: Evidence from the housing market crisis," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 74-86.
    6. Edelbloude, Johanna & Fontan Sers, Charlotte & Makhlouf, Farid, 2017. "Do remittances respond to revolutions? The Evidence from Tunisia," Research in International Business and Finance, Elsevier, vol. 42(C), pages 94-101.
    7. L. De & J. Gaillard & W. Friesen & F. Smith, 2015. "Remittances in the face of disasters: a case study of rural Samoa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(3), pages 653-672, June.
    8. Syed Ali Abbas & Eliyathamby A. Selvanathan & Saroja Selvanathan, 2023. "The foreign aid and remittance nexus: Evidence from South Asia," The World Economy, Wiley Blackwell, vol. 46(7), pages 2032-2053, July.
    9. Abbas, Syed Ali & Selvanathan, Eliyathamby A. & Selvanathan, Saroja & Bandaralage, Jayatilleke S., 2021. "Are remittances and foreign aid interlinked? Evidence from least developed and developing countries," Economic Modelling, Elsevier, vol. 94(C), pages 265-275.

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