Output Growth Volatility, Remittances, and Financial Development in the Common Market for Eastern and Southern Africa Region: A System Generalized Method of Moments Approach

Eyayu Tesfaye Mulugeta ()
Additional contact information
Eyayu Tesfaye Mulugeta: Addis Ababa University

Journal of the Knowledge Economy, 2025, vol. 16, issue 1, No 100, 2844-2860

Abstract: Abstract The paper aims to empirically examine the effect of remittances on output growth volatility conditional on the level of financial development. Our analysis covers 17 common markets for Eastern and Southern Africa member countries over the period from 1981 to 2019. The study adopted an endogeneity-robust system generalized methods of moments estimator developed for a dynamic panel model as a method of analysis. The findings revealed that remittances do have a dampening effect on output growth volatility, which supports the counter-cyclicality argument and is consistent with theoretical and empirical intuitions. We also found that the growth volatility reduction potential of remittances was found to be more pronounced in the presence of a well-functioning financial system. The results are robust in terms of different measurements of output volatility. Based on the findings, we can reaffirm that the growth volatility-stabilizing influence of remittances is an increasing function of the level of financial development.

Keywords: Remittances; Financial development; Growth volatility; System generalized method of moments; Common Market for Eastern and Southern Africa (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s13132-024-01775-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jknowl:v:16:y:2025:i:1:d:10.1007_s13132-024-01775-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13132

DOI: 10.1007/s13132-024-01775-6

Access Statistics for this article

Journal of the Knowledge Economy is currently edited by Elias G. Carayannis

More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().