The effect of remittances prior to an election

The objective of the article is to assess whether remittances have an influence on political manipulation, which may occur prior to an election, through an increase in the government consumption-to-GDP ratio. We combine data from the National Elections across Democracy and Autocracy data set compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators data set. We focus on 70 developing countries over the period 1990–2010. It appears that the political budget cycle is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7% of GDP. Those findings are robust to different robustness checks.     

The effect of remittances on the current account in developing and emerging economies

This paper presents an analysis of the effect of remittances on the current account in developing and emerging economies, incorporating an assessment of the extent to which exchange rate regimes impact the relationship. The main findings suggest that there is a positive effect of remittances on the current account contemporaneously, but that the lagged effect is negative, which could be indicative of the existence of some underlying mechanisms characteristic of the Dutch disease phenomenon. In addition, the results show that a more flexible exchange regime dampens the contemporaneous positive effect that remittances have on the current account. The paper, therefore, asserts that policymakers face trade‐offs pertaining to the use of exchange rate policy in managing the effects of remittances on the current account, which should be given due consideration when such policy choices are made.     

Altruism: primary motivation of remittances

This article examines primary incentives of remittances. After controlling for host country’s GNI per capita, real exchange rates and real interest rates, a rise in home country’s GNI per capita leads to fewer remittances. A rise in host country’s GNI per capita motivates migrants to remit more. Real interest rates have no effect on remittances. These results indicate primary incentive of remittances is altruism.     

Migrant remittances and fertility

This study examines the role of migrants’ remittances in developing countries’ fertility transition. Employing an unbalanced panel of South Asian countries and controlling for various economic and socio-demographic factors, we find that remittances are significantly associated with a lower number of children born to women of childbearing age. This suggests the remittances’ substitution effect to be at play rather than the income effect, and may result from decreased need for children for financing the household’s future needs as well as from better access to healthcare and contraceptive methods available to migrant households. Remittances’ association with fertility appears to be more important than the transfer of fertility norms from migrants’ host countries. The monetary aspects of international migration may therefore be more important for the region’s demographic transition than social remittances.     

Macroeconomic impacts of remittances in Bangladesh: The role of reverse flows

Das and Serieux (2010; 2015) and Serieux (2011) used the term “reverse flows” to define the part of external resources that is not domestically absorbed; instead used to finance debt obligations, capital flight, and accumulate reserves. While there is a vast literature on the growth and development impact of remittances in developing countries, the existing empirical literature has mostly ignored the potential diversion of remittances to reverse flows. This paper bridges the gap in the literature by estimating the reverse flows in the case of Bangladesh, which is one of the top remittance recipient countries in the world. The data set runs from 1976 to 2015. Econometric results obtained by employing the Autoregressive Distributed Lag (ARDL) approach show that almost 13–14% of remittances (as the ratio of gross domestic product, GDP) are diverted to finance reverse flows. In other words, the effects of remittances (as the ratio of GDP) on consumption and investment rates are no more than 86–87%. Therefore, the underlying assumption made in the existing literature that all remittances are used to increase consumption and/or investment overstates the impact of this external resource flow in Bangladesh. Findings from this study have important policy implications not only for Bangladesh but for other remittance recipient developing countries. Our findings will help the government to design policies to ensure the optimum allocation of remittances in the domestic economy.     

The influence of remittances on education and health outcomes: a cross country study

We study the effect of international remittances on aggregate educational and health outcomes using a sample of 69 low- and middle-income countries. We find that remittances play an important role in improving primary and secondary school attainment, increasing life expectancy and reducing infant mortality. Our results suggest that as migration laws continue to support greater emigration and remittances, policies should be enacted to facilitate the flow of remittances as they represent a significant source for economic development.     

Migration,remittances and human capital investment in Kenya

This paper investigates the relationship between international migration, remittances, and human capital investment in Kenya. We use household‐level data from the 2009 Kenya Migration Household Survey (which was part of the Africa Migration Project) to test our hypothesis and uncover a positive and significant relationship between the amount of international remittances a household receives and the amount of expenditures allocated to education (for all levels of education). We consider various robustness checks and find that our results hold up to various specifications, including an instrumental variable approach.     

The effects of remittances,foreign direct investment,and foreign aid on economic growth: An empirical analysis

The Sustainable Development Goals have refocused attention on ways of providing external finance to support development. Because they have different motivations and work through different modalities, remittances, foreign direct investment (FDI), and official development assistance may be expected to have different consequences for economic growth. Existing empirical evidence suggests that both positive and negative effects are associated with each source of finance. We use both a dynamic panel model and a fixed effects model to calculate the overall effects of each source of finance in isolation and taken together over the period 1976–2015. We include a range of control variables to allow for other potential influences on economic growth. We disaggregate the effects across geographical regions and income levels to test for heterogeneity. We also undertake a series of robustness checks. Our results suggest that FDI has a significant positive effect on economic growth, whereas remittances have a significant and negative effect. The effect of foreign aid is more ambiguous but is usually insignificant. The article offers an interpretation of the results drawing on ideas from the relevant theory.     

Corruption,remittances, and public goods: A unified framework

Remittances are an important source of income for the very countries afflicted by high levels of corruption. However, corruption undermines the development potential of remittances. With this in mind, we propose policy reforms that harness the potential of remittances while mitigating corruption. Unlike previous studies, we point to two channels: (1) the corrupt government's trade-off between its financial interests (corruption), the provision of a public good, and the gains from a higher inflow of remittances; and (2) the household's consumption of the public good relative to that of the privately obtained substitute of the public good.     

On the causal nexus of remittances and poverty reduction in Bangladesh

The aim of this article is to investigate the causal relationship between remittances and poverty reduction in Bangladesh over the period 1976 to 2010. This issue is of fundamental importance for the developing economy of Bangladesh. We apply newly developed methods by Hacker and Hatemi-J (2006, 2012) that are based on simulations and are robust to the violation of statistical assumptions especially when the sample size is small, as is the case in this article. Our estimation results reveal that causality nexus of poverty and remittances is bi-directional. We also find that the causal impact of poverty reduction on remittance is stronger than the reverse impact. This finding implies that Bangladeshi policy-makers can influence remittances through poverty reduction in the long run.     

The effects of international remittances on expenditure patterns of the left‐behind households in Sub‐Saharan Africa

This article explores the effects of international remittances on the expenditure patterns of households in Sub‐Saharan Africa (SSA). This article focuses on five countries in SSA, which are some of the destinations that account for the highest receipt of international remittances. We analyze both aggregate and distributional effects of international remittances on expenditure patterns of households. To investigate the distributional effect of international remittances, we adopt the instrumental variable quantile (IV‐quantile) regression framework that allows us to simultaneously address the endogeneity of international remittances and possible heterogeneity in the impact of international remittances on households’ expenditure patterns. We instrument for international remittances by using the economic conditions in migrants’ countries as an instrument for international remittances. Our results show that the receipt of international remittances increases expenditures on food, durables, education, and health. Using the IV‐quantile regression, we find the effects of international remittances on household expenditure on food, durables, education, and health increase across the different expenditure quantiles.     

Labor and behavior determinants of remittances in Saudi Arabia

Saudi Arabia is the second largest sender of international remittances. These remittances constitute large foreign capital inflows to labor‐exporting remittee economies. This study is the first to structurally decompose remittance dynamics into behavioral and labor market outcomes of migrants. Remittance outflows are decomposed into migrant labor supply, unemployment and participation rates, wage earnings, and the marginal propensity to remit (MPR) out of migrant earnings. The estimates suggest that migrant labor supply is highly elastic. The important driver of remittance dynamics is the MPR, migrant wages, and the labor supply of migrants. The MPR is found to respond counter‐cyclically to foreign gross domestic product.     

A Kaleckian model for understanding and responding to the economic policy challenges of remittances

In this work we construct a Kaleckian model for analyzing the impacts of remittances upon economies of receiving countries. The arrival of remittances has two harmful effects: contraction of income, and the so-called Dutch Disease (DD). We use our model to formulate an economic policy with two objective variables and two instrumental variables, to solve or attenuate these problems.     

Short- and long-term relation between economic development and government spending: the role of quality of institutions

ABSTRACT

This paper tests the Wagner’s assumption of the one-sided directional flow moving from economic growth to public spending considering an international database over the 1996–2012 period. By using indicators on the level of country control of corruption, government effectiveness, political stability, rule of law, regulatory quality and voice and accountability, the paper analyses the economic performance-public spending nexus controlling for the quality of the institutions. The empirical evidence supports the existence of the Wagner’s law, showing that, in the short-run, public spending positively reacts to a positive shock in national income, with a lower magnitude for democratic countries. In the long run, the error-correction model shows the convergence between public spending and national output occurring less quickly for non-democratic, low-income and to a smaller extent for non-OECD countries. Institutional quality, such as effort in controlling corruption and the presence of regulations that permit and promote private sector development, may help reducing the amount of per capita public spending and making it more productive. Higher expenses in compositional amenities such as public services for the elderly may explain why public spending per capita will increase the most in economies with a higher share of the population that need healthcare facilities.     

Deposit insurance,remittances, and dollarization: Survey‐based evidence from a top remittance‐receiving country

The study uses a unique survey of remittance‐receiving individuals from Tajikistan to study the impact of policy awareness on consumer behavior. The results show that knowledge of deposit insurance encourages the use of formal channels for transmitting remittances and reduces dollarization. Given the size and importance of remittances in Tajikistan, improving financial literacy and better publicizing details of the social safety net may encourage a more frequent use of formal channels for transferring remittances and reduce reliance on foreign exchange for transaction purposes. This is likely to improve bank profitability, enhance financial stability, and improve access to finance.     

The causal effect of coalition governments on fiscal policies: evidence from a Regression Kink Design

Proportional election systems are widespread across countries and often lead to coalition governments. This creates interest in how the form of government (single-party or coalition governments) causally influences fiscal policies. It is difficult to estimate this causal effect empirically because the form of government is not randomly assigned to political units. I overcome this problem by using a Regression Kink Design which exploits that there is a slope change in the treatment probability at the 50% vote share of the strongest party. This method is applied to a large panel data set of German local governments. I find that contrary to the theoretical prediction, coalition governments significantly decrease expenditures.     

最优政府规模的测度及其与经济效益关系研究

通过对Lynn MacDonald构建的最优政府规模模型进行扩展并构建计量模型,用政府人员规模和资金规模两大指标衡量政府规模,使用我国1990～2013年的宏观统计数据对政府规模和经济效益之间的关系及29个省级行政单位的最优政府规模进行实证分析。结论认为政府规模是影响经济效益的重要因素,资金规模比人员规模的影响要大,部分省级行政单位已经非常接近最优政府规模,但是还有很多省级行政单位存在政府支出不足或政府支出过度等现象。     

The Spending Multiplier in the Medium Run

Most of the discussion about fiscal stimulus focuses on the multiplier of government spending on impact. In this paper we shift the focus to the multiplier at the end, i.e., to the period in which a deficit spending program terminates. We show that recent time‐series analyses and neoclassical as well new Keynesian business cycle models predict that the multiplier turns negative before spending expires. This means that aggregate output at the time of expiry of fiscal stimulus is lower than it could be without deficit spending. Here, we show why this phenomenon is a general outcome of mainstream business cycle theory and explain the underlying mechanism. Using phase diagram analysis, we prove that the aggregate capital stock at the time of expiry of fiscal stimulus is lower than it would be without a deficit spending program. This fact explains why aggregate output is below its laissez faire level as well.     

Impact of remittances on household health care expenditure: Evidence from the Nepal Living Standards Survey

This paper examines the effect of remittance inflows on health care expenditure in Nepal using the Nepal Living Standards Survey 2010–2011. Using the recursive three‐stage least square regression method, the propensity score matching method, and the Oaxaca–Blinder decomposition method, we find a positive and significant effect of remittances on health care expenditure. In particular, our analysis shows a 0.099% increase in health care expenditure for every 1% increase in overall remittances. This effect increases to 0.189% for earned remittances (remittances received from a household member). We also find that remittance‐receiving households with at least one migrant family member have different health care spending behavior than those with no migrant members.     

Remittances channels and the physical growth of Honduran children

Ensuring the availability of food and other resources for young children is important for sustaining physical growth. We examine the role of remittances and its associated implications in determining heights and weights of 4459 children aged 0–5 years in Honduras in 2004. To address the endogeneity problem with household remittance receipt, we take advantage of the timing of Hurricane Mitch in 1998 to construct instrumental variables that are exogenously related to migration decisions made before children included in the later survey were conceived. We find that children are significantly taller and heavier for their age and gender in households receiving remittances. Further investigation of household spending indicates significant changes in food purchases and dietary diversity. Households receiving remittances are more likely to include fish, fruits, and meats in their diets. Additional findings also indicate that households receiving remittances spend absolutely more on food, health care, education, and durable goods. Overall, the findings provide strong evidence that remittances change household consumption and increase children’s body sizes.