IMF Working Papers

Remittances in Times of Uncertainty: Understanding the Dynamics and Implications

By Patrick A. Imam, Kangni R Kpodar, Djoulassi K. Oloufade, Vigninou Gammadigbe

November 22, 2024

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Format: Chicago

Patrick A. Imam, Kangni R Kpodar, Djoulassi K. Oloufade, and Vigninou Gammadigbe. "Remittances in Times of Uncertainty: Understanding the Dynamics and Implications", IMF Working Papers 2024, 244 (2024), accessed November 22, 2024, https://doi.org/10.5089/9798400293450.001

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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.

Summary

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.

Subject: Balance of payments, Migration, Population and demographics, Remittances

Keywords: Migration, Remittances, Remittances, Shocks, Uncertainty

Publication Details

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