Monday, August 13, 2012

17 August 2012: Macroeconomic Effects of International Remittances: The Case of Developing Economies

Puja Guha
ISI Bangalore

Over the past few decades International workers' Remittances have
significantly contributed to the foreign exchange reserves of the
developing countries. While these household level remittance flows
have often been associated with poverty alleviation, positive welfare
gains and even as an alternate source of development finance, a
detailed study of the effects of these flows on a remittance dependent
, small developing economy, however shows counterintuitive results.
The paper applies the Dutch Disease theory to explain the effects of
remittances on the economy and introduces a micro-macro framework to
establish channels of transmission of remittances through the economy.
The paper shows that international remittances, by altering the
household budget constraint, have a direct impact on the micro level
household decision making, primarily with respect to the consumption
and labor supply decisions. These when aggregated give rise to
significant adjustments in the macro level production functions and
consumption behaviors, leading to a decline in the output,
particularly of the trading sector and an adverse impact on the
external sector of the economy.

Date: August 17, 2012
Time: 11:30 A.M.

Seminar Room 2
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (INDIA)


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