NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Are Bilateral Remittances Countercyclical?

Jeffrey A. Frankel

NBER Working Paper No. 15419
Issued in October 2009
NBER Program(s):   IFM

By putting together a relatively large data set on bilateral remittances of emigrants, this paper is able to shed light on the important hypothesis of smoothing. The smoothing hypothesis is that remittances are countercyclical with respect to income in the worker’s country of origin (the recipient of the remittance), while procyclical with respect to income in the migrant’s host country (the sender of the remittance). The econometric results confirm the hypothesis. This affirmation of smoothing is important for two reasons. First, it suggests that remittances should be placed on the list of criteria for an optimum currency area. Second, it sheds light on plans by governments in some developing countries to harness remittances for their own use, in that government spending in these countries generally fails the test of countercyclicality that remittances pass.

download in pdf format
   (176 K)

email paper

This paper is available as PDF (176 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15419

Published: Jeffrey Frankel, 2011. "Are Bilateral Remittances Countercyclical?," Open Economies Review, Springer, vol. 22(1), pages 1-16, February. citation courtesy of

Users who downloaded this paper also downloaded these:
Cox and Ureta w9766 International Migration, Remittances, and Schooling: Evidence from El Salvador
Yang w12325 International Migration, Remittances, and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks
Funkhouser Mass Emigration, Remittances, and Economic Adjustment: The Case of El Salvador in the 1980s
Hanson w14490 The Economic Consequences of the International Migration of Labor
Kaminsky, Reinhart, and Vegh When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us