What Do Remittances Do? Analyzing the Private Remittance Transmission Mechanism in El Salvador

November 1, 2006

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Format: Chicago

Luis René Cáceres, and Nolvia Nery Saca. What Do Remittances Do? Analyzing the Private Remittance Transmission Mechanism in El Salvador, (USA: International Monetary Fund, 2006) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Family remittances are important for El Salvador's economy. This paper analyzes the impact of remittances on El Salvador's economy and the spillover effects on the other Central American countries. A vector autoregression (VAR) model is formulated, consisting of real and monetary variables. The results suggest that in, El Salvador, remittances lead to decreases in economic activity, international reserves, and money supply and increases in the interest rate, imports, and consumer prices. This underscores the need for reorienting economic policy in El Salvador to promote the use of remittances in capital formation activities to maximize the benefit of remittances.

Subject: Imports, International reserves, Monetary base, Real exchange rates, Remittances

Keywords: Economic activity, Exchange rate, Price level, Remittance, Result, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/250
Stock No:

WPIEA2006250
ISBN:

9781451865103
ISSN:

1018-5941

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