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Remittances and Household Consumption Instability in Developing Countries

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  • Christian EBEKE
  • Jean-Louis COMBES

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This paper analyzes the impact of remittances on household consumption instability in developing countries on a large panel of developing countries. The four main results are the following: Firstly, remittances significantly reduce household consumption instability. Secondly, the insurance role played by remittances is highlighted: remittances dampen the effect of various sources of consumption instability in developing countries (natural disasters, agricultural shocks, discretionary fiscal policy). Thirdly, the insurance role played by remittances is more important in less financially developed countries. Fourthly, the overall stabilizing effect of remittances is mitigated when remittances over GDP exceed 8.5%.

Suggested Citation

  • Christian EBEKE & Jean-Louis COMBES, 2010. "Remittances and Household Consumption Instability in Developing Countries," Working Papers 201015, CERDI.
    • Handle: RePEc:cdi:wpaper:1165
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    More about this item

    Keywords

    Remittances; Consumption instability; Financial Development; Shocks; Threshold effects;
    All these keywords.

    JEL classification:

    • F29 - International Economics - - International Factor Movements and International Business - - - Other
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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