Do Remittances Facilitate a Sustainable Current Account?

Hassan, Gazi; Holmes, Mark J.

doi:10.1111/twec.12361

Cited by 20 publications

(14 citation statements)

References 45 publications

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“…One main finding of this study suggests that an increase in remittances will have a positive effect on the current account contemporaneously, which is consistent with the finding in Hassan and Holmes () that more remittances facilitate a weakly sustainable current account balance. The results, however, also suggests on the contrary, that the lagged impact of remittances is negative, which is indicative of the existence of some underlying mechanisms that may cause the current account to deteriorate in subsequent periods, potentially the Dutch disease phenomenon.…”

Section: Resultssupporting

confidence: 91%

“…current account reversals. Hassan and Holmes (2014) study the relationship between remittances and the sustainability of the current account, rather than the size of the current account balance. They find that more remittances facilitate a weakly sustainable current account balance and that higher levels of remittances lead to a faster speed of adjustment or lower persistence of the current account following shocks.…”

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confidence: 99%

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The effect of remittances on the current account in developing and emerging economies

Lartey

2019

Economic Notes

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This paper presents an analysis of the effect of remittances on the current account in developing and emerging economies, incorporating an assessment of the extent to which exchange rate regimes impact the relationship. The main findings suggest that there is a positive effect of remittances on the current account contemporaneously, but that the lagged effect is negative, which could be indicative of the existence of some underlying mechanisms characteristic of the Dutch disease phenomenon. In addition, the results show that a more flexible exchange regime dampens the contemporaneous positive effect that remittances have on the current account. The paper, therefore, asserts that policymakers face trade‐offs pertaining to the use of exchange rate policy in managing the effects of remittances on the current account, which should be given due consideration when such policy choices are made.

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Section: Resultssupporting

confidence: 91%

mentioning

confidence: 99%

The effect of remittances on the current account in developing and emerging economies

Lartey

2019

Economic Notes

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“…In order to account for other control variables that have been utilized in the extant literature, a variant specification of the model introduces relative GDP (to OECD countries), net exports and net foreign assets. 10 The results, as shown in Table 7, are generally supportive of the prior findings. Specifically, coefficient estimates for remittances are positive and statistically significant in all cases.…”

Section: Introducing Variant Control Variablessupporting

confidence: 82%

The Effect of Remittances on the Current Account in Developing and Emerging Economies

Lartey

2018

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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“…Remittances towards developed countries are not the primary interest of this paper; instead, the main incentives of remitting money to all countries and developing countries are explored. During recent years, different aspects of remittances towards developing countries have been under scrutiny of researchers, such as the growth impact of remittance (Barajas, Chami, Fullenkamp, Gapen, & Montiel, ; Giuliano & Ruiz‐Arranz, ; Rao & Hassan, ); the impact of remittances on poverty and inequality (Adams & Page, ; Acosta, Calderon, Fajnzylber, & Lopez, ); the impact of remittances on financial development (Aggarwal, Demirg‐Kunt, & Peria, ; Brown, Carmignani, & Fayad, ); the impact of remittances on current account (Hassan & Holmes, ); remittances and business ownership (Amuedo‐Dorantes & Pozo, ); remittances and financial access (Ambrosius, ); and the impact of education and gender on remittances (Cooray, ; Le Goff & Salomone, ). However, this paper focuses on the main determinants of remittances and more specifically the motivations behind remittances.…”

Section: Introductionmentioning

confidence: 99%

Why do migrants remit?

Azizi

2018

World Economy

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This paper examines primary incentives of remitting. Using estimated bilateral data on remittances, this paper demonstrates that a rise in the home (remittance‐receiving) country's gross national income (GNI) per capita leads to fewer remittances and that a rise in the host (remittance‐sending) country's GNI per capita motivates migrants to remit more. Real exchange rates and real interest rates have no effect on remittances. These results indicate that altruism is an important and critical component of motivations behind remittances. However, altruism alone does not appear to be a sufficient explanation of the motivations behind remittances. Other incentives such as loan repayment and investment play a non‐negligible role in this regard as well. The degree of altruism is higher for migrants from developing countries in comparison with migrants from developed countries, and it is higher when we define remittances as “personal transfers” rather than “personal transfers and compensation of employees.” The results of the vector error correction model show if remittances deviate from the equilibrium relationship, they will eventually revert.

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Do Remittances Facilitate a Sustainable Current Account?

Cited by 20 publications

References 45 publications

The effect of remittances on the current account in developing and emerging economies

The effect of remittances on the current account in developing and emerging economies

The Effect of Remittances on the Current Account in Developing and Emerging Economies

Why do migrants remit?

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