Remittances and Vulnerability in Developing Countries

By Giulia Bettin, Andrea F Presbitero, Nikola Spatafora

January 27, 2014

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Giulia Bettin, Andrea F Presbitero, and Nikola Spatafora. Remittances and Vulnerability in Developing Countries, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 107 developing countries over the period 2005-2011. We find that remittances are negatively correlated with the business cycle in recipient countries, and increase in response to adverse exogenous shocks, such as natural disasters or large declines in the terms of trade. Remittances are positively correlated with economic conditions in the source province. Nevertheless, in the presence of similar negative shocks to both source and recipient economies, remittances remain counter-cyclical with respect to the recipient country.

Subject: Balance of payments, Business cycles, Economic growth, Financial crises, Financial markets, Financial sector development, Global financial crisis of 2008-2009, Migration, Natural disasters, Population and demographics, Remittances

Keywords: Bilateral remittance, Business cycle, Business cycles, Financial sector development, Global, Global financial crisis of 2008-2009, Gravity model, Migration, Remittance corridor, Remittance inflow, Remittances, Remittances outflow, Shocks, Transfer cost, Vulnerability, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/013
Stock No:

WPIEA2014013
ISBN:

9781484385081
ISSN:

1018-5941

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