TY  - JOUR
AU  - Frankel,Jeffrey A.
TI  - Are Bilateral Remittances Countercyclical?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15419
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15419
L1  - http://www.nber.org/papers/w15419.pdf
N1  - Author contact info:
Jeffrey A. Frankel
Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-3834
Fax: 617/496-5747
E-Mail: jeffrey_frankel@harvard.edu
AB  - 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.
ER  -