Remittances and vulnerability in developing countries. Bettin, G., Presbitero, A., F., & Spatafora, N., L. The World Bank Economic Review, 2015.
Paper abstract bibtex This paper examines how international remittances are affected by structural character-istics, macroeconomic conditions, and adverse shocks in recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian prov-inces to seventy-nine developing countries over the period 2005– 2011. We find that re-mittances are negatively correlated with the business cycle in recipient countries and in particular increase in response to adverse exogenous shocks, such as large terms-of-trade declines. This effect is stronger where the migrant communities have a larger share of newly arrived migrants. Finally, we show that recipient-country financial develop-ment is negatively associated with remittances, suggesting that remittances help alleviate credit constraints. JEL codes: F33, F34, F35, O11 This paper examines the drivers of remittances, with a focus on whether remit-tances should be viewed as a countercyclical shock absorber, helping smooth consumption during a downturn in recipient economies, in contrast to the typi-cally pro-cyclical private capital flows. This issue is particularly salient for two reasons. First, remittances to developing countries have grown steadily relative to Giulia Bettin is an assistant professor of economics at the Università Politecnica delle Marche (Italy) and MoFiR; her email address is: g.bettin@univpm.it. Andrea F.
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abstract = {This paper examines how international remittances are affected by structural character-istics, macroeconomic conditions, and adverse shocks in recipient economies. We exploit a novel, rich panel data set, covering bilateral remittances from 103 Italian prov-inces to seventy-nine developing countries over the period 2005– 2011. We find that re-mittances are negatively correlated with the business cycle in recipient countries and in particular increase in response to adverse exogenous shocks, such as large terms-of-trade declines. This effect is stronger where the migrant communities have a larger share of newly arrived migrants. Finally, we show that recipient-country financial develop-ment is negatively associated with remittances, suggesting that remittances help alleviate credit constraints. JEL codes: F33, F34, F35, O11 This paper examines the drivers of remittances, with a focus on whether remit-tances should be viewed as a countercyclical shock absorber, helping smooth consumption during a downturn in recipient economies, in contrast to the typi-cally pro-cyclical private capital flows. This issue is particularly salient for two reasons. First, remittances to developing countries have grown steadily relative to Giulia Bettin is an assistant professor of economics at the Università Politecnica delle Marche (Italy) and MoFiR; her email address is: g.bettin@univpm.it. Andrea F.},
bibtype = {article},
author = {Bettin, Giulia and Presbitero, Andrea F and Spatafora, Nikola L},
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