Macroeconomic consequences of remittances

Two main issues that are of interest to policymakers with regards to remittances include how to manage macroeconomic effects and how to harness development potential in developing countries. A global study of the comprehensive macroeconomic effects of remittances on the economies that receive them addresses the above questions by reporting results. The study also draws summary policy implications for countries that receive significant flows of remittances. Based on the study, remittances improve households' welfare by lifting families out of poverty and insuring them against income shocks. However, the study also yields a number of caveats and policy considerations that have been overlooked: measurement, fiscal policy, debt sustainability, fiscal discipline, economic growth, dutch disease effects, governance and incentives, and role of international financial institution. The main challenge for policymakers is to design policies that promote remittances and increase benefits while mitigating adverse side effects.

Duke Scholars

Author Connel Fullenkamp Economics