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http://ssrn.com/abstract=880292
 
 

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Are Immigrant Remittance Flows a Source of Capital for Development?


Ralph Chami


International Monetary Fund (IMF)

Connel Fullenkamp


Duke University - Department of Economics

Samir Jahjah


International Monetary Fund - INS

September 2003

IMF Working Paper No. 03/189

Abstract:     
The role of remittances in development and economic growth is not well understood. This is partly because the literatures on the causes and effects of remittances remain separate. We develop a framework that links the motivation for remittances with their effect on economic activity. Because remittances take place under asymmetric information and economic uncertainty, there exists a significant moral hazard problem. The implication is that remittances have a negative effect on economic growth. We test this prediction using panel methods on a large sample of countries. The results indicate that remittances do have a negative effect on economic growth, which indicates that the moral hazard problem in remittances is severe.

Number of Pages in PDF File: 48

Keywords: remittances, altruism, asymmetric information, private income transfers, moral hazard, economic growth

JEL Classification: D1, D64, D82, F2, F22, O15

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Date posted: February 6, 2006  

Suggested Citation

Chami, Ralph and Fullenkamp, Connel and Jahjah, Samir, Are Immigrant Remittance Flows a Source of Capital for Development? (September 2003). IMF Working Paper, Vol. , pp. 1-48, 2003. Available at SSRN: http://ssrn.com/abstract=880292

Contact Information

Ralph Chami (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
202-623-6039 (Phone)
202-623-6068 (Fax)
Connel Fullenkamp
Duke University - Department of Economics ( email )
Durham, NC 27708-0204
United States
(919) 660-1800 (Phone)
Samir Jahjah
International Monetary Fund - INS ( email )
700 19th Street NW
Washington, DC 20431
United States
202-623-3682 (Phone)
202-589-6823 (Fax)
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