Remittances in Times of Uncertainty: Understanding the Dynamics and Implications
IMF Working Papers, November 22, 2024
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- Remittances in Times of Uncertainty: Understanding the Dynamics and Implications
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Bibliographic details
- Authors: Patrick A. Imam, Kangni R Kpodar, Djoulassi K. Oloufade, Vigninou Gammadigbe
- Published: November 22, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400293450.001
Research scope and dataset
- New dataset of quarterly remittances combined with uncertainty indicators across 77 developing countries from 1999Q1 to 2019Q4.
- Working Paper No. 2024/244; Pages: 39; Volume: 2024; Issue: 244; DOI: https://doi.org/10.5089/9798400293450.001; ISBN: 9798400293450; ISSN: 1018-5941.
Key findings on uncertainty and remittance flows
- Uncertainty in remittance-sending countries negatively affects remittance flows.
- Uncertainty in remittance-receiving countries has a heterogeneous and non-linear effect:
- In countries with high private investment ratios, rising domestic uncertainty leads to a decline in remittances.
- In countries with low public spending on education and health, remittances increase in response to uncertainty, functioning as a social safety net.
- The analysis emphasizes that domestic uncertainty does not produce uniform effects across countries; effects depend on country-specific characteristics such as private investment ratios and public spending on education and health.
Thematic implications and analysis
- Emphasis on the distinction between tangible risk factors (exchange rate volatility, economic downturn) and more diffuse uncertainty measures; the latter can play an independent and significant role in remittance dynamics.
- The dual role of remittances: acting both as a countercyclical buffer in contexts with limited public social spending and as a flow that can contract when domestic private-sector investment prospects deteriorate.
- Heterogeneous and non-linear relationships indicate that policy responses and vulnerability assessments should be tailored to country-specific fiscal and investment profiles.
Subject areas and keywords covered
- Subject: Balance of payments, Expenditure, Health care spending, Migration, National accounts, Population and demographics, Private investment, Remittances.
- Keywords: Global, Health care spending, IRF of remittance, Migration, Private investment, remittance dynamics, remittance flow, Remittances, remittances in times, Shocks, Uncertainty, uncertainty indicator.
IMF Working Paper by Patrick A. Imam, Kangni R Kpodar, Djoulassi K. Oloufade, and Vigninou Gammadigbe; November 22, 2024.
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- Working Paper