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The Macroeconomic Impact of Remittances: A sending country perspective

Timo Baas and Silvia Maja Melzer ()
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Silvia Maja Melzer: Department of Sociology, University of Bielefeld

No 2012021, Norface Discussion Paper Series from Norface Research Programme on Migration, Department of Economics, University College London

Abstract: Using data for Germany, we analyze the impact of migration and remittances by developing an open-economy general equilibrium model with heterogeneous households. Within the model, the flows of remittances depend on the altruism of households. Households with higher altruism coefficient derive a higher utility from consumption of distant household members. Estimating the interrelation between household characteristic and remittances, we are able to derive altruism coefficients for different types of households. Applying the coefficients to our model, we show that remittances affect the macroeconomy primarily through the real exchange rate channel. Stronger remittances outflows depreciate the real exchange rate and give incentives to reallocate resources from the non-tradable towards tradable goods sectors. In the case of Germany, this translates into a converse dutch disease phenomenon.

Keywords: EU Eastern enlargement; remittances; international migration; computable equilibrium model (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-mig
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: The Macroeconomic Impact of Remittances: A Sending Country Perspective (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:nor:wpaper:2012021

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