Munich Personal RePEc Archive

Remittances over the Business Cycle: Theory and Evidence

Islamaj, Ergys and Kose, Ayhan M. and De, Supriyo and Yousefi, S. Reza (2019): Remittances over the Business Cycle: Theory and Evidence. Published in: Economic Notes: Review of Banking, Finance and Monetary Economics , Vol. 48, No. 3 (November 2019): pp. 1-18.

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We examine the behaviour of remittances over the business cycle and their potential to act as a ‘stabilizer’ during periods of high business cycle volatility. Two main findings are reported. First, remittances are less volatile than other foreign currency flows and do not appear to systemically comove with business cycle fluctuations. Second, remittances are relatively stable even during episodes of sharp business cycle volatility, such as those associated with sudden stops and financial crises. We also provide an overview of the theoretical literature on the implications of different motives to remit for the cyclical behaviour of remittances.

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