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Are remittances an instrument of stabilization and funding in the euro area?

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  • L. Correia
  • P. Martins

Abstract

In this study, we explore the specific question of the counter cyclicality of remittances in the euro area, namely, if they could be used to stabilize the business cycle and as an additional source of external financing. This research uses data for 13 euro area countries in the period 2004–2013. For whole of the sample, our two hypotheses concerning stabilization and external financing are rejected, but Lithuania and Greece are outliers. Remittances seem to have had a macroeconomic stabilizing effect on Lithuania and to have mitigated in part the liquidity problems that Greece has faced since the sovereign debt crisis.

Suggested Citation

  • L. Correia & P. Martins, 2016. "Are remittances an instrument of stabilization and funding in the euro area?," Applied Economics Letters, Taylor & Francis Journals, vol. 23(16), pages 1177-1181, November.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:16:p:1177-1181
    DOI: 10.1080/13504851.2016.1142647
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    References listed on IDEAS

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    10. Mr. Erik Lueth & Marta Ruiz-Arranz, 2006. "A Gravity Model of Workers’ Remittances," IMF Working Papers 2006/290, International Monetary Fund.
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    Cited by:

    1. Leonida Correia & Patrícia Martins, 2019. "Has the sovereign debt crisis changed the cyclicality of Portuguese remittances?," International Review of Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 453-472, May.

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