Remittances and the Macroeconomy: The Case of Small Island Developing States

Catalina Amuedo-Dorantes, Susan Pozo and Carlos Vargas-Silva

No RP2007-22, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: In this paper we examine how remittances relate to the exchange rate, natural disasters and foreign aid in developing economies. By using panel VAR methods we are able to compensate for both data limitations and endogeneity among variables. We find that while foreign aid tends to appreciate the real exchange rate, remittances do not have the same impact. We also detect an inverse relationship between the real exchange rate and remittance amounts, with real exchange rate depreciation increasing remittance inflows.

Keywords: Economic assistance and foreign aid; Emigrant remittances; Natural disasters; Panel analysis (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (14)

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