International Worker Remittances and Economic Growth in a Real Business Cycle Framework

Michael Batu

No 1701, Working Papers from University of Windsor, Department of Economics

Abstract: In this article I augment the standard open economy Real Business Cycle (RBC) model with stochastic remittance shocks. The model was calibrated to match broad, stylized facts common across a large set of remittance recipient countries. The calibration exercise reveals that output does not respond as much to remittance shocks relative to technology shocks. The model predicts that temporary inflows of worker remittances positively affect GDP per capita while a permanent increase of remittances does not. Cross country econometric evidence is consistent with the theory: there is a significant and positive correlation between the temporary component of remittances and growth; and permanent component of remittances do not affect output growth.

Keywords: Remittances; business cycles; economic growth (search for similar items in EconPapers)
JEL-codes: E32 F24 O11 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2017-01
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1701.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: International worker remittances and economic growth in a Real Business Cycle framework (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:wis:wpaper:1701

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