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Do Worker Remittances Reduce Output Volatility in Developing Countries?

Author

Listed:
  • Chami Ralph

    (International Monetary Fund)

  • Hakura Dalia S.

    (The International Monetary Fund)

  • Montiel Peter J.

    (Williams College)

Abstract

The theoretical and empirical effects of remittance inflows on output volatility are ambiguous. On the one hand, remittances have been remarkably stable compared to other inflows, and they seem to be compensatory in nature, rising when the home country’s economy suffers a downturn. On the other hand, the labor supply effects induced by altruistic remittances could cause the output effects associated with technology shocks to be magnified. Based on a sample of 70 remittance-recipient countries, we find that remittances have a negative effect on output growth volatility, thereby supporting the notion that remittance flows are a stabilizing influence on output.

Suggested Citation

  • Chami Ralph & Hakura Dalia S. & Montiel Peter J., 2012. "Do Worker Remittances Reduce Output Volatility in Developing Countries?," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-25, June.
    • Handle: RePEc:bpj:globdv:v:3:y:2012:i:1:n:2
    DOI: 10.1515/1948-1837.1151
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    More about this item

    Keywords

    remittances; output volatility; developing countries;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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