Remittances and Vulnerability in Developing Countries

30 Pages Posted: 20 Apr 2016

See all articles by Giulia Bettin

Giulia Bettin

Università Politecnica delle Marche - Department of Economics

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

Nicola Spatafora

International Monetary Fund (IMF)

Date Written: March 1, 2014

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.

Keywords: Population Policies, Debt Markets, Remittances, Access to Finance, Economic Conditions and Volatility

Suggested Citation

Bettin, Giulia and Presbitero, Andrea Filippo and Spatafora, Nikola, Remittances and Vulnerability in Developing Countries (March 1, 2014). World Bank Policy Research Working Paper No. 6812. Available at SSRN: https://ssrn.com/abstract=2412291

Giulia Bettin (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli 8
Ancona, 18039
Italy
+39 071 2207079 (Phone)
+39 071 2207102 (Fax)

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

Piazza Mirabello, 2
Milan, 20100
Italy

Nikola Spatafora

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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