Publication: Remittances and Vulnerability in Developing Countries
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Date
2014-03
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Published
2014-03
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Abstract
This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. The paper exploits a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 87 developing countries over the period 2005-2011. Remittances are negatively correlated with the business cycle in recipient countries and increase especially strongly in response to adverse exogenous shocks, such as natural disasters or large terms-of-trade declines. Financial development in the source economy, which eases access to financial services for migrants and reduces transaction costs, is positively associated with remittances. Conversely, recipient-country financial development is negatively associated with remittances, suggesting that remittances help alleviate credit constraints.
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“Bettin, Giulia; Presbitero, Andrea F.; Spatafora, Nikola. 2014. Remittances and Vulnerability in Developing Countries. Policy Research Working Paper;No. 6812. © http://hdl.handle.net/10986/17727 License: CC BY 3.0 IGO.”
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