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Migrants Remittances Influence on Fiscal Sustainability in Dependent Economies

Author

Listed:
  • Liliana Simionescu

    (The Bucharest University of Economic Studies, Romania)

  • Dalina Dumitrescu

    (The Bucharest University of Economic Studies, Romania)

Abstract
Migrants’ remittances are an important financial flow to their country of origin. Remittances sent by migrants reduce the level and severity of poverty in developing countries. Householders use this money received from migrants for their private consumption and their investments. This paper aims to analyse the impact of remittances on economic growth, private consumption, private investments and the government tax revenue in low and upper middle-income countries. The paper highlights one of the important migration’s drivers, respectively economic reasons. Our findings are based on data from 74 developing countries collected for the period between 1989 and 2015. Using a panel data set , our results show that migrants’ remittances are positively related with economic growth and private consumption expenditure. Moreover, the results also indicate that variables such as age dependency ratio and the number of individuals holding an account at a financial institution are statistically significant in models having GDP per capita and private consumption as dependent variables. Furthermore, our results show that migrants’ remittances are associated with government tax revenue and real interest rate when instrumental variables were used.

Suggested Citation

  • Liliana Simionescu & Dalina Dumitrescu, 2017. "Migrants Remittances Influence on Fiscal Sustainability in Dependent Economies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 640-640, August.
    • Handle: RePEc:aes:amfeco:v:46:y:2017:i:19:p:640
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    Cited by:

    1. Craig A. Depken & Maja Nikšić Radić & Hana Paleka, 2021. "Causality between Foreign Remittance and Economic Growth: Empirical Evidence from Croatia," Sustainability, MDPI, vol. 13(21), pages 1-13, November.
    2. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Remittances and Real Exchange Rate: Latest Evidence from Cochrane Orcutt Econometric Model," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(2), pages 166-172, June.
    3. Alina Petronela Haller & Rodica Cristina Butnaru & Gina Ionela Butnaru, 2018. "International Migrant Remittances in the Context of Economic and Social Sustainable Development. A Comparative Study of Romania-Bulgaria," Sustainability, MDPI, vol. 10(4), pages 1-34, April.
    4. Bucevska Vesna, 2022. "Impact of Remittances on Economic Growth: Empirical Evidence from South-East European Countries," South East European Journal of Economics and Business, Sciendo, vol. 17(1), pages 79-94, June.

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    More about this item

    Keywords

    migrants’ remittances; consumption; investment; government tax revenue; fiscal policy; monetary policy.;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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