Should Moroccan Officials Depend on the Workers’ Remittances to Finance the Current Account Deficit?

Bentour, El Mostafa (2013): Should Moroccan Officials Depend on the Workers’ Remittances to Finance the Current Account Deficit? Forthcoming in:

Abstract

The Moroccan economy relies heavily on remittances from abroad to the extent they are far more significant sources of income than others such as foreign direct investments and tourism. To assess the reliability of this external financing source by testing the resilience vis-à-vis the hosting countries, we summarize, in this paper, the impact of the business cycles of major hosting European countries on Moroccan workers’ remittances using impulse response functions of a VAR modeling approach. Our findings include, first: the remittances to Morocco and major European countries’ GDP are positively correlated (i.e, are procyclical). Second, the recent global financial crisis and the following downturns in countries, such as Italy and Spain, significantly reduced remittances, while remittances from Germany, Netherlands, Belgium and Luxembourg do not seem to be extremely affected.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances, Current Account Balance, Impulse Response Functions
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; F - International Economics > F2 - International Factor Movements and International Business > F24 - Remittances

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