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Should Moroccan Officials Depend on the Workers’ Remittances to Finance the Current Account Deficit?

El Mostafa Bentour

MPRA Paper from University Library of Munich, Germany

Abstract: The Moroccan economy relies heavily on remittances from abroad to the extent they are far more significant sources of income than others such as foreign direct investments and tourism. To assess the reliability of this external financing source by testing the resilience vis-à-vis the hosting countries, we summarize, in this paper, the impact of the business cycles of major hosting European countries on Moroccan workers’ remittances using impulse response functions of a VAR modeling approach. Our findings include, first: the remittances to Morocco and major European countries’ GDP are positively correlated (i.e, are procyclical). Second, the recent global financial crisis and the following downturns in countries, such as Italy and Spain, significantly reduced remittances, while remittances from Germany, Netherlands, Belgium and Luxembourg do not seem to be extremely affected.

Keywords: Remittances; Current Account Balance; Impulse Response Functions (search for similar items in EconPapers)
JEL-codes: C13 C22 C32 F24 (search for similar items in EconPapers)
Date: 2013-05-01, Revised 2013-05-01
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52290

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