Please use this identifier to cite or link to this item: https://hdl.handle.net/20.500.11851/6630
Title: Emerging Market Business Cycles with Remittance Fluctuations
Authors: Durdu, Ceyhun Bora
Sayan, Serdar
Keywords: [No Keywords]
Issue Date: 2010
Publisher: Palgrave Macmillan Ltd
Abstract: This paper analyzes the implications of remittance fluctuations for various macroeconomic variables and sudden stops. The paper employs a quantitative two-sector model of a small open economy with financial frictions calibrated to Mexican and Turkish economies, two major recipients, whose remittance receipts feature opposite cyclical characteristics. We find that remittances dampen business cycles in Mexico, whereas they amplify the cycles in Turkey. Their quantitative effects in the long run, approximated by the stochastic steady state, are mild. In the short run, however, remittances have quantitatively large impacts on the economy, when the economy is borrowing-constrained. This is because agents in the economy cannot adjust their precautionary wealth to sudden tightening in credit, and hence, fluctuations in remittances get magnified through an endogenous debt-deflation mechanism. The findings suggest that procyclical (or countercyclical) remittances can play a significant deepening (or mitigating) role for sudden stops. [JEL F41, F32, E32] IMF Staff Papers (2010) 57, 303-325. doi:10.1057/imfsp.2009.3; published online 15 December 2009
URI: https://doi.org/10.1057/imfsp.2009.3
https://hdl.handle.net/20.500.11851/6630
ISSN: 1020-7635
Appears in Collections:İktisat Bölümü / Department of Economics
Scopus İndeksli Yayınlar Koleksiyonu / Scopus Indexed Publications Collection
WoS İndeksli Yayınlar Koleksiyonu / WoS Indexed Publications Collection

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