Remittances Channel and Fiscal Impact in the Middle East, North Africa, and Central Asia

42 Pages Posted: 27 Aug 2012

See all articles by Yasser Abdih

Yasser Abdih

International Monetary Fund (IMF)

Adolfo Barajas

International Monetary Fund (IMF) - Western Hemisphere Department

Ralph Chami

International Monetary Fund (IMF)

Christian Ebeke

Centre d’Etudes et de Recherches sur le Développement International, CERDI-CNRS

Date Written: April 2012

Abstract

This paper identifies a remittances channel that transmits exogenous shocks, such as business cycles in remittance-sending countries, to the public finances of remittance-receiving countries. Using panel data for remittance-receiving countries in the Middle East, North Africa, and Central Asia, three types of results emerge. First, remittances appear to be strongly procyclical vis-Ã-vis sending country income. Second, remittances tend to be spent on consumption of both imported and domestically produced goods, rather than on investment. Third, shocks in the sending countries are transmitted via remittances to the public finances - specifically, tax revenues - of receiving countries. In the case of the 2009 global downturn, this impact was particularly strong for several countries in the Caucasus and Central Asia, whereas in the subsequent recovery in 2010 virtually all receiving countries benefitted from an upturn in remittance-driven tax revenues.

Keywords: Private Demand, Tax Revenues, Instrumental Variables, Panel Data, International Factor Movements And International Business, Taxation, Subsidies, And Revenue, remittances, remittance, tax revenues, tax revenue, fiscal impact, impact of remittances, remittance inflows, migration, workers ? remittances, bilateral remittances, value of remittances, tax bases, remittance flows, effect of remittances, determinants of remittances, remittance channel, public finances, fiscal balance, primary fiscal balance, bilateral remittance, amount of remittances, fiscal space, capita remittances, remittances inflows, fiscal balances, per capita remittances, tax base, remitter, utilization of remittances, capit

JEL Classification: E20, E37

Suggested Citation

Abdih, Yasser and Barajas, Adolfo and Chami, Ralph and Ebeke, Christian, Remittances Channel and Fiscal Impact in the Middle East, North Africa, and Central Asia (April 2012). IMF Working Paper No. 12/104. Available at SSRN: https://ssrn.com/abstract=2135983

Yasser Abdih (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Adolfo Barajas

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4152 (Phone)
202-623-6070 (Fax)

Ralph Chami

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6039 (Phone)
202-623-6068 (Fax)

Christian Ebeke

Centre d’Etudes et de Recherches sur le Développement International, CERDI-CNRS ( email )

65 Boulevard Francois Mitterrand
63000 Clermont-Ferrand Cedex 1
France

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