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The Impact of Remittances on Economic Activity: The Importance of Sectoral Linkages
Author:
Hector Perez-Saiznull

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https://orcid.org/0000-0001-6376-636X
,
Mr. Jemma Dridi
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,
Tunc Gursoynull

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, and
Mounir Barinull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 175
Language:
English
Publication Date:
16 Aug 2019
DOI:
https://doi.org/10.5089/9781498324489.001
ISBN:
9781498324489
ISSN:
1018-5941
Pages:
37
Keywords:
WP; remittances inflow; economic growth; Remittances; Sub-Saharan Africa; networks; centrality; remittances data; remittances inlows; remittances flow; remittances receipts; remittances matter; remittances recipient; remittances transaction; SSA economy; remittance-sending country; Production growth; Consumption; Labor supply; Income; Africa
Legal-disclaimer:
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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We propose a simple macroeconomic model with input-output sectoral linkages based on Acemoglu et al. (2016) to quantify how changes in aggregate demand due to additional income from household’s remittances propagates through the network of input-output linkages in Sub-Saharan African countries. We first propose two network centrality measures to assess the role of some sectors as key input providers in the economy. Then, we use these measures to quantify the effect of sectoral linkages on sectoral and total output following an increase in remittances inflows. Our empirical results suggest that the effects of remittances on recipient economies increase with the degree of linkages across sectors, which is especially prominent in the case of the financial intermediation sector. Our paper contributes to the emerging macroeconomic literature on the propagation of shocks across sectors and the implications for the whole economy.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 175