The Macroeconomic Consequences of Remittances Academic Article uri icon

abstract

  • This study examines the impact of a remittances shock on the main macroeconomic aggregates of a small open economy. It uses a stochastic limited participation model to generate dynamics that are consistent with the empirical literature, like the increase in inflation, consumption, and leisure. However, the remittances shock generates a prolonged decline in GDP, which only diminishes when remittances are a larger percentage of GDP, the fraction of remittances directed towards investment increases, or when the fraction of labor income that remittances represent is reduced and is overturned when the persistence of the remittances shocks is shortened.

published proceedings

  • ISRN Economics

author list (cited authors)

  • Jansen, D. W., Vacaflores, D. E., & Naufal, G. S.

citation count

  • 9

complete list of authors

  • Jansen, Dennis W||Vacaflores, Diego E||Naufal, George S

publication date

  • September 2012