The impact of remittances on household consumption stability and economic growth is not quite clear. This paper attempts to reopen the debate on the relationship among…
The impact of remittances on household consumption stability and economic growth is not quite clear. This paper attempts to reopen the debate on the relationship among these three variables. The current remittance literature suggests that a decrease in household consumption volatility, induced by remittances, automatically leads to economic growth. This paper challenges these arguments by stating that, under certain circumstances, there is no automatic relationship among remittances, household consumption stability and growth.
The authors approach the question from the perspective of emerging Central, Eastern and Southeastern European (CESEE) countries. The authors use the two-step system generalized method of moments (GMM) estimator with the Windmeijer (2005) finite-sample correction. To test the existence of the possible non-linear effects of remittances on household consumption stability and economic growth, the authors use threshold regressions.
The authors find that remittances significantly reduce household consumption volatility. They exhibit a consumption-smoothing effect on recipient households. This stabilizing effect happens not through the preventive role of remittances, but rather through their compensatory role. Remittances produce a weaker stabilizing effect on household consumption when the remittance to GDP ratio of the recipient country is above the estimated threshold level of 4.5%. The authors also find that there is a negatively significant and linear impact of remittances on growth. There is no evidence to suggest that remittances can foster productive investment and therefore promote economic growth in CESEE countries, which means that: (1) the remittances cannot be treated as a source of funds to invest in human and physical capital and (2) the remittances are compensatory rather than profit-oriented.
As far as the authors are aware, this is the first study that investigates the impact of remittances on both household consumption stability and economic growth simultaneously.
The purpose of this paper is to examine the export performance of the Republic of Macedonia to its main trading partners from Southeast Europe; hence, the authors focus on…
The purpose of this paper is to examine the export performance of the Republic of Macedonia to its main trading partners from Southeast Europe; hence, the authors focus on the major importing countries which are most present in the Macedonian trade balance.
The data used in this paper are analyzed with gravity model, which has good characteristics and very stable performance. Further, the data sample is formed on major importers form the Southeastern Europe region.
The results show that the domestic country GDP is positively correlated with the exports from the source country to target countries and that Balkan countries have positive propensities to import from Macedonia, however, it was found that populations of source country and target country are negatively correlated with exports from the source country to target countries. Additionally, the business cycles had no positive effect on Macedonian export to the target countries.
Based on pertinent theoretical concepts and existing empirical findings, and by applying up-to-date methodological approach, case studies might bring vital contribution to the literature, which eventually leads to solid policy and practice.