Remittances: An Automatic Output Stabilizer?
By R. Chami, Dalia S. Hakura, Peter J. Montiel. Social Science Research Network, 2009
155 citations recorded by the source corpus.
Remittance flows appear to be falling worldwide for the first time in decades as a result of the ongoing financial turmoil. It is suspected that the drop in remittance income into developing and emerging markets will have a destabilizing effect on these economies. The paper estimates the impact of remittances on output stability for countries that are dependent on these income flows. Using a sample of 70 countries, including 16 advanced economies and 54 developing countries, we find robust evidence that remittances have a negative effect on output growth volatility of recipient countries. This result supports the notion that remittance flows are a stabilizing influence on output. Thus, the fall in remittances precipitated by the ongoing global financial crisis could potentially increase output variability in recipient countries. This would present a hard challenge for governments in those countries already suffering from the crisis: they must resort to an already stressed and limited set of policy instruments, such as fiscal policy, to counter the resulting adverse economic and social impacts of lower remittances.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/3cfbdf28c22dc2a7570f8212f40895548290c1d8
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Citations in the corpus
- Determinants and Macroeconomic Impact of Remittances in Sub-Saharan Africa (2009, unknown): “Using a sample of 70 countries, including both advanced and developing economies, Chami et al. (2009) find evidence supporting the notion that remittance flows provide a stabilizing influence on output.”
- Remittances, investment and growth in sub-Saharan Africa (2013, background): “Chami, Hakura and Montiel ( 2009 ) provide some evidence in support of the role of remittances as automatic stabilizer.”
- Remittances and Household Consumption Instability in Developing Countries (2011, methodology): “There is some evidence that the macroeconomic effects of remittances in the recipient economies may depend on the size of remittance flows (Abdih et al., 2008, Chami et al., 2008 and Chami et al, 2009).”
- The Impact of Migrant Remittances on Economic Growth: Evidence from South Asia (2012, unknown): “Remittances have also been found to promote economic growth (Mundaca, 2009), promote financial sector development (Giuliano and Ruiz-Arranz, 2009; Aggarwal et al., 2006) and reduce output volatility (Chami et al., 2009).”
- Impact of Migration on Economic and Social Development: A Review of Evidence and Emerging Issues (2011, background): “Remittances have been found to have an income stabilizing effect at both the macroeconomic level (World Bank 2006b, Chami et al. 2009) and at the household level.”