What Do Remittances Do? Analyzing the Private Remittance Transmission Mechanism in El Salvador

 
Author/Editor: Nery Saca, Nolvia ; Cáceres, Luis René
 
Publication Date: November 01, 2006
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Family remittances are important for El Salvador's economy. This paper analyzes the impact of remittances on El Salvador's economy and the spillover effects on the other Central American countries. A vector autoregression (VAR) model is formulated, consisting of real and monetary variables. The results suggest that in, El Salvador, remittances lead to decreases in economic activity, international reserves, and money supply and increases in the interest rate, imports, and consumer prices. This underscores the need for reorienting economic policy in El Salvador to promote the use of remittances in capital formation activities to maximize the benefit of remittances.
 
Series: Working Paper No. 06/250
Subject(s): Workers remittances | El Salvador | Economic indicators | Economic policy | Capital formation | Economic models

Author's Keyword(s): Remittances | mechanism of transmission
 
English
Publication Date: November 01, 2006
ISBN/ISSN: 0 / 1934-7073 Format: Paper
Stock No: WPIEA2006250 Pages: 30
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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