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Rainfall, financial development, and remittances: Evidence from Sub-Saharan Africa

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  • Arezki, Rabah
  • Brückner, Markus

Abstract

We use annual variations in rainfall to examine the effects that exogenous, transitory income shocks have on remittances in a panel of 41 Sub-Saharan African countries during the period 1970–2007. Our main finding is that on average rainfall shocks have an insignificant contemporaneous effect on remittances. However, the marginal effect is significantly decreasing in the share of domestic credit to GDP. So much so, that at high levels of credit to GDP rainfall shocks have a significant negative effect on remittances, while at low levels of credit to GDP the effect of rainfall on remittances is significantly positive.

Suggested Citation

  • Arezki, Rabah & Brückner, Markus, 2012. "Rainfall, financial development, and remittances: Evidence from Sub-Saharan Africa," Journal of International Economics, Elsevier, vol. 87(2), pages 377-385.
    • Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:377-385
    DOI: 10.1016/j.jinteco.2011.12.010
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    More about this item

    Keywords

    Transitory income shocks; Remittances; Financial development;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F30 - International Economics - - International Finance - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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