Economic Uncertainty and Remittances Flow: Heterogeneity Matters

MAWUSI, Charles (2020): Economic Uncertainty and Remittances Flow: Heterogeneity Matters.

Abstract

This paper analyzes the effect of economic policy uncertainty on inward remittances for 138 countries over the period 1995-2018. While our results suggest that increased economic policy uncertainty induces remittances in the long-run, we find that significant heterogeneity exists across advanced, emerging, and developing economies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances, Economic uncertainty, system GMM, Panel data
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; F - International Economics > F2 - International Factor Movements and International Business > F24 - Remittances

References

Ahir, H., Bloom, N., & Furceri, D. (2018) “The World Uncertainty Index” Data accessfrom https://www.policyuncertainty.com/wui_quarterly.html

Arapi-Gjini, A., Möllers, J., & Herzfeld, T. (2020). Measuring Dynamic Effects of Remittances on Poverty and Inequality with Evidence from Kosovo. Eastern European Economics, 1-26.

Arellano, M., & Bover, O. (1995) “Another look at the instrumental variable estimation of error components models” Journal of econometrics, 68(1), 29-51.

Azizi, S. (2019). The impacts of workers’ remittances on poverty and inequality in developing countries. Empirical Economics, 1-23.

Balta, N., Fernandez, I. V., & Ruscher, E. (2013).Assessing the impact of uncertainty onconsumption and investment. Quarterly Report on the Euro Area (QREA), 12(2), 7-16.

Blundell, R., & Bond, S. (1998) “Initial conditions and moment restrictions in dynamic panel data models” Journal of econometrics, 87(1), 115-143.

Blundell, R., & Bond, S. (2000). GMM estimation with persistent panel data: an application to production functions. Econometric reviews, 19(3), 321-340.

Caggiano, G., Castelnuovo, E., & Figueres, J. M. (2020). Economic policy uncertainty spillovers in booms and busts. Oxford Bulletin of Economics and Statistics, 82(1), 125- 155.

Chami, R., Fullenkamp, C., & Jahjah, S. (2005). Are immigrant remittance flows a source of capital for development? IMF Staff papers, 52(1), 55-81.

De, S., Islamaj, E., Kose, M. A., & Reza Yousefi, S. (2019). Remittances over the business cycle: Theory and evidence. Economic Notes: Review of Banking, Finance and Monetary Economics, 48(3), e12143.

Delpierre, M., & Verheyden, B. (2014). Remittances, savings and return migration under uncertainty. IZA Journal of Migration, 3(1), 22.

Dustmann, C. (1997). Return migration, uncertainty and precautionary savings. Journal of development economics, 52(2), 295-316.

Escribà-Folch, A., Meseguer, C., & Wright, J. (2015). Remittances and democratization. International Studies Quarterly, 59(3), 571-586.

Hasan, S. B., Akhter, R., & Saha, S. (2019). Impact of Remittance on Economic Growth in Bangladesh. American Journal of Trade and Policy, 6(1), 41-48.

Hu, S., & Gong, D. (2019). Economic policy uncertainty, prudential regulation and bank lending. Finance Research Letters, 29, 373-378.

Kakhkharov, J. (2019). Migrant remittances as a source of financing for entrepreneurship. International Migration, 57(5), 37-55.

Luk, P., Cheng, M., Ng, P., & Wong, K. (2020). Economic policy uncertainty spillovers in small open economies: The case of Hong Kong. Pacific Economic Review, 25(1), 21-46

Nickell, S. (1981). Biases in dynamic models with fixed effects. Econometrica: Journal of the econometric society, 1417-1426.

Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The stata journal, 9(1), 86-136.

Roodman, D. (2009b). A note on the theme of too many instruments. Oxford Bulletin of Economics and statistics, 71(1), 135-158.

World Bank (2019). “Migration and Remittances: Recent Developments and Outlook: Transit Migration.” Migration and Development Brief 31, World Bank, Washington, DC, April.

Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-stepGMM estimators. Journal of econometrics, 126(1), 25-51.