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Defying the Odds: Remittances During the COVID-19 Pandemic

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  • Mr. Kangni R Kpodar
  • Mr. Montfort Mlachila
  • Mr. Saad N Quayyum
  • Vigninou Gammadigbe

Abstract

This paper provides an early assessment of the dynamics and drivers of remittances during the COVID-19 pandemic, using a newly compiled monthly remittance dataset for a sample of 52 countries, of which 16 countries with bilateral remittance data. The paper documents a strong resilience in remittance flows, notwithstanding an unprecedent global recession triggered by the pandemic. Using the local projection approach to estimate the impulse response functions of remittance flows during Jan 2020-Dec 2020, the paper provides evidence that: (i) remittances responded positively to COVID-19 infection rates in migrant home countries, underscoring its role as an important automatic stabilizer; (ii) stricter containment measures have the unintended consequence of dampening remittances; and (iii) a shift from informal to formal remittance channels due to travel restrictions appears to have also played a role in the surge in formal remittances. Lastly, the size of the fiscal stimulus in host countries is positively associated with remittances as the fiscal response cushions the economic impact of the pandemic.

Suggested Citation

  • Mr. Kangni R Kpodar & Mr. Montfort Mlachila & Mr. Saad N Quayyum & Vigninou Gammadigbe, 2021. "Defying the Odds: Remittances During the COVID-19 Pandemic," IMF Working Papers 2021/186, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/186
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    Cited by:

    1. Buffie, Edward F. & Adam, Christopher & Zanna, Luis-Felipe & Kpodar, Kangni, 2023. "Loss-of-learning and the post-Covid recovery in low-income countries," Journal of Macroeconomics, Elsevier, vol. 75(C).
    2. Pablo Aguilar Perez, 2024. "Global Spillovers of US Monetary Policy: New Insights from the Remittance Channel," Working Papers hal-04706954, HAL.
    3. Stark, Oded, 2023. "A rejoinder to "The impact of infectious diseases on remittances inflows to India"," Journal of Policy Modeling, Elsevier, vol. 45(3), pages 677-680.
    4. Kibrom A Abay & Nishant Yonzan & Sikandra Kurdi & Kibrom Tafere, 2023. "Revisiting Poverty Trends and the Role of Social Protection Systems in Africa during the COVID-19 Pandemic," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 44-68.
    5. Zubin Deyal, 2024. "Weathering the storm: investigating the role of remittances as immediate disaster relief in developing countries," CSAE Working Paper Series 2024-01, Centre for the Study of African Economies, University of Oxford.
    6. Kpodar, Kangni & Amir Imam, Patrick, 2024. "How do transaction costs influence remittances?," World Development, Elsevier, vol. 177(C).
    7. Ana Paula Goerne Luna & Jaime Lara Lara & Luz Daniela Montañez Martínez & Regina Saracho Cueto & Alonso Torre De Silva & Iliana Michelle Zaldivar Galindo, 2023. "COVID-19 and remittances to Mexican states," Economics and Business Letters, Oviedo University Press, vol. 12(1), pages 33-39.
    8. 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.
    9. Immaculate Machasio & Peter Tillmann, 2021. "Remittance Flows and U.S. Monetary Policy," MAGKS Papers on Economics 202140, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Dinarte Diaz,Lelys Ileana & Jaume,David Jose & Medina-Cortina,Eduardo & Winkler,Hernan, 2022. "Neither by Land nor by Sea : The Rise of Electronic Remittances during COVID-19," Policy Research Working Paper Series 10057, The World Bank.

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