Shocks, Remittances and Household Consumption: A Dynamic System GMM Analysis

Yonas Alem

No 18-2, EfD Discussion Paper from Environment for Development, University of Gothenburg

Abstract: We use a dynamic system GMM regression on five rounds of panel data to estimate the impact of international remittances on consumption of urban Ethiopian households, who spend more than 70% of their consumption budget on food. Results suggest that international remittances play a significant role in augmenting household consumption. A 1% increase in remittances from abroad leads to a 0.10% increase in household consumption. Taking advantage of the detailed nature of the panel data, we also show that households that experienced idiosyncratic shocks are likely to send a member abroad and receive international remittances. The paper sheds light on the magnitude of the impact of international remittances and the characteristics of the socio-economic groups who take advantage of a rapidly changing economic environment, such as access to international migration.

Keywords: Remittances; Shocks; Household Consumption. (search for similar items in EconPapers)
JEL-codes: C23 D12 F24 O15 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2018-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:gunefd:2018_002

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