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Workers’ Remittances: An Overlooked Channel of International Business Cycle Transmission?

Author

Listed:
  • Mr. Adolfo Barajas
  • Mr. Ralph Chami
  • Mr. Christian H Ebeke
  • Mr. Sampawende J Tapsoba

Abstract

This paper shows that remittance flows significantly increase the business cycle synchronization between remittance-recipient countries and the rest of the world. Using both aggregate and bilateral remittances data in a panel data setting, the study demonstrates that this effect is robust and causal. Moreover, the econometric analysis reveals that remittance flows are more effective in channeling economic downturns than upswings from the sending countries to remittance-receiving economies. The analysis suggests that measures of openness and spillovers could be enhanced by accounting for the role of the remittances channel.

Suggested Citation

  • Mr. Adolfo Barajas & Mr. Ralph Chami & Mr. Christian H Ebeke & Mr. Sampawende J Tapsoba, 2012. "Workers’ Remittances: An Overlooked Channel of International Business Cycle Transmission?," IMF Working Papers 2012/251, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2012/251
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    Cited by:

    1. Mthuli Ncube & Zuzana Brixiova, 2013. "Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa," Working Paper Series 996, African Development Bank.
    2. Khodeir, Aliaa, 2015. "Migration Remittances Inflows and Macroeconomic Shocks: The Case of Egypt," MPRA Paper 103506, University Library of Munich, Germany, revised 2015.
    3. Kristina Matuzeviciute & Mindaugas Butkus, 2016. "Remittances, Development Level, and Long-Run Economic Growth," Economies, MDPI, vol. 4(4), pages 1-20, December.
    4. Giulia Bettin & Andrea F. Presbitero & Nikola L. Spatafora, 2017. "Remittances and Vulnerability in Developing Countries," The World Bank Economic Review, World Bank, vol. 31(1), pages 1-23.
    5. Barajas, Adolfo & Chami, Ralph & Ebeke, Christian & Oeking, Anne, 2018. "What's different about monetary policy transmission in remittance-dependent countries?," Journal of Development Economics, Elsevier, vol. 134(C), pages 272-288.
    6. Bayramov, Vugar & Rustamli, Nabi & Abbas, Gulnara, 2020. "Collateral damage: The Western sanctions on Russia and the evaluation of implications for Russia’s post-communist neighbourhood," International Economics, Elsevier, vol. 162(C), pages 92-109.
    7. Dobronravova, E. & Trunin, P., 2024. "International monetary policy transmission in EAEU countries," Journal of the New Economic Association, New Economic Association, vol. 62(1), pages 219-228.
    8. Aman Pushp & Rahul Singh Gautam & Vikas Tripathi & Jagjeevan Kanoujiya & Shailesh Rastogi & Venkata Mrudula Bhimavarapu & Neha Parashar, 2023. "Impact of Financial Inclusion on India’s Economic Development under the Moderating Effect of Internet Subscribers," JRFM, MDPI, vol. 16(5), pages 1-15, May.
    9. Hou, Yulin & Jia, Shaomeng, 2023. "Do remittances react to commodity windfall? Evidence from Latin America and the Caribbean," Economic Modelling, Elsevier, vol. 121(C).
    10. Antje Hildebrandt & Isabella Moder, 2015. "Business cycle synchronization between the Western Balkans and the European Union," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 8-25.
    11. Dr Victor O. Okoye & Kenechukwu J. Nwisienyi, 2022. "Analysis of the Major Determinants of Remittances to Nigeria: 1990 – 2019," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(3), pages 69-76, March.
    12. Mihaela Simionescu & Yuriy Bilan & Grzegorz Mentel, 2017. "Economic Effects of Migration from Poland to the UK," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 757-757, August.
    13. Vladislav Abramov, 2020. "Spillover Effects of Russian Monetary Policy Shocks on the Eurasian Economic Union," Bank of Russia Working Paper Series wps60, Bank of Russia.
    14. Aliaa Nabil Khodeir, 2015. "Migration Remittances Inflows and Macroeconomic Shocks: The Case of Egypt," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 1001-1010.
    15. Immaculate Machasio & Peter Tillmann, 2016. "Remittance Infl ows and State-Dependent Monetary Policy Transmission in Developing Countries," MAGKS Papers on Economics 201638, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    16. Tigran Poghosyan, 2023. "Remittances in Russia and Caucasus and Central Asia: The gravity model," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1224-1241, May.
    17. Alessio Ciarlone, 2023. "Remittances in times of crisis: evidence from Italian corridors," Temi di discussione (Economic working papers) 1402, Bank of Italy, Economic Research and International Relations Area.
    18. Ms. Kimberly Beaton & Mr. Serhan Cevik & Mr. Seyed Reza Yousefi, 2017. "Smooth Operator: Remittances and Fiscal Shocks," IMF Working Papers 2017/165, International Monetary Fund.
    19. Junaid Ahmed & Inmaculada Martinez-Zarzoso, 2016. "Blessing or Curse," Journal of South Asian Development, , vol. 11(1), pages 38-66, April.

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