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Are Immigrant Remittance Flows a Source of Capital for Development?
Author:
Mr. Samir Jahjah
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Mr. Ralph Chami
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Connel Fullenkamp null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2003: Issue 189
Language:
English
Publication Date:
01 Sep 2003
DOI:
https://doi.org/10.5089/9781451859638.001
ISBN:
9781451859638
ISSN:
1018-5941
Pages:
47
Keywords:
WP; worker remittance; economic growth; interest rate; remittances; altruism; asymmetric information; private income transfers; moral hazard; remittance transfer; remittance literature; remittance-determination equation; remittance determination; remittance arrangement; effects of remittance; remittance decision; remittance choice; remittance inflow; Migration; Income; Outward remittances; Middle East
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund