Workers’ Remittances: An Overlooked Channel of International Business Cycle Transmission?

Author/Editor:

Adolfo Barajas ; Ralph Chami ; Christian H Ebeke ; Sampawende J Tapsoba

Publication Date:

October 19, 2012

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

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 shows that remittance flows significantly increase the business cycle synchronization between remittance-recipient countries and the rest of the world. Using both aggregate and bilateral remittances data in a panel data setting, the study demonstrates that this effect is robust and causal. Moreover, the econometric analysis reveals that remittance flows are more effective in channeling economic downturns than upswings from the sending countries to remittance-receiving economies. The analysis suggests that measures of openness and spillovers could be enhanced by accounting for the role of the remittances channel.

Series:

Working Paper No. 2012/251

Subject:

Balance of payments Business cycles Economic growth Foreign direct investment International trade Remittances Terms of trade

English

Publication Date:

October 19, 2012

ISBN/ISSN:

9781475535822/1018-5941

Stock No:

WPIEA2012251

Pages:

25

Please address any questions about this title to publications@imf.org