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Remittances and Vulnerability in Developing Countries

Author/Editor: Giulia Bettin | Andrea Presbitero | Nicola Spatafora
Authorized for Distribution: January 27, 2014
Electronic Access: Free Full Text (PDF file size is 838KB)
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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: 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.
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Series: Working Paper No. 14/13
Subject(s): Workers remittances | Italy | Developing countries | Business cycles | Economic models
    Published:   January 27, 2014        
    ISBN/ISSN:   9781484385081/1018-5941   Format:   Paper
    Stock No:   WPIEA2014013   Pages:   33
    Price:   US$18.00
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