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Remittances in Times of Uncertainty: Understanding the Dynamics and Implications
Author:
Patrick A. Imam
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,
Kangni R Kpodar
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Djoulassi K. Oloufade
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Vigninou Gammadigbe
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Series:
IMF Working Papers
Volume/Issue:
Volume 2024: Issue 244
Language:
English
Publication Date:
22 Nov 2024
DOI:
https://doi.org/10.5089/9798400293450.001
ISBN:
9798400293450
ISSN:
1018-5941
Pages:
39
Keywords:
Remittances; Uncertainty; Shocks; remittance flow; remittance dynamics; IRF of remittance; remittances in times; uncertainty indicator; Migration; Private investment; Health care spending; Global
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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This paper delves into the intricate relationship between uncertainty and remittance flows. The prevailing focus has been on tangible risk factors like exchange rate volatility and economic downturn, overshadowing the potential impact of uncertainty on remittance dynamics. Leveraging a new dataset of quarterly remittances combined with uncertainty indicators across 77 developing countries from 1999Q1 to 2019Q4, the analysis highlights that uncertainty in remittance-sending countries negatively affects remittance flows. In contrast, uncertainty in remittance receiving-countries has a more complex, dual effect. In countries with high private investment ratios, rising domestic uncertainty leads to a decline in remittances. Conversely, in countries with low public spending on education and health, remittances increase in response to uncertainy, serving as a social safety net. The paper underscores the heterogeneous and non-linear effects of domestic uncertainty on remittance flows.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund