Remittances and Vulnerability in Developing Countries

Giulia Bettin, Andrea Presbitero and Nikola Spatafora

No 2014/013, IMF Working Papers from International Monetary Fund

Abstract: This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 107 developing countries over the period 2005-2011. We find that remittances are negatively correlated with the business cycle in recipient countries, and increase in response to adverse exogenous shocks, such as natural disasters or large declines in the terms of trade. Remittances are positively correlated with economic conditions in the source province. Nevertheless, in the presence of similar negative shocks to both source and recipient economies, remittances remain counter-cyclical with respect to the recipient country.

Keywords: WP; remittance corridor; bilateral remittance; remittances outflow; transfer cost; remittance inflow; Remittances; Shocks; Business cycle; Vulnerability; Gravity model; Migration; Financial sector development; Business cycles; Global financial crisis of 2008-2009; Global (search for similar items in EconPapers)
Pages: 33
Date: 2014-01-27
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Remittances and Vulnerability in Developing Countries (2017)
Working Paper: Remittances and vulnerability in developing countries (2014)
Working Paper: Remittances and vulnerability in developing countries (2014)
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