A large theoretical and empirical literature has focused on the impact of fi nancial deepening on economic growth throughout the world. This paper contributes to the literature by investigating whether this impact differs across regions, income levels, and types of economy. Using a rich data set for 150 countries for the period 1975-2005, dynamic panel estimation results suggest that the benefi cial effect of fi nancial deepening on economic growth in fact displays measurable heterogeneity; it is generally smaller in oil exporting countries; in certain regions, such as the Middle East and North Africa (MENA); and in lower-income countries. Further analysis suggests that these differences might be driven by the degree of competition, and related to differences in the ability to provide widespread access to fi nancial services. JEL Classifi cation: G2, O0, O4, O5, O53
This paper examines the behavior of remittances over the business cycle and their potential to act as a stabilizer during periods of high business cycle volatility. Four main findings are reported. First, in theory, the cyclical behavior of remittances depends on the motives to remit. Second, remittances are less volatile than other foreign currency flows but do not appear to systemically co-move with business cycle fluctuations. Third, remittances are relatively stable even during episodes of sharp business cycle volatility, such as those associated with sudden stops and financial crises. Finally, remittances can help support consumption stability over the business cycle.
We examine the behaviour of remittances over the business cycle and their potential to act as a ‘stabilizer’ during periods of high business cycle volatility. Two main findings are reported. First, remittances are less volatile than other foreign currency flows and do not appear to systemically comove with business cycle fluctuations. Second, remittances are relatively stable even during episodes of sharp business cycle volatility, such as those associated with sudden stops and financial crises. We also provide an overview of the theoretical literature on the implications of different motives to remit for the cyclical behaviour of remittances.
How does a decline in oil prices and its impacts on growth affect remittance outflows from the Gulf Cooperation Council (GCC) countries? This paper carries out an empirical analysis of the relationship between oil prices, oil‐ and non‐oil GDP, and remittances outflows from the GCC. The findings of our paper are three folds. First, we find that non‐oil GDP is a key determinant of remittance outflows and that oil GDP is a significant driver of non‐oil GDP in the GCC only in the long term. Second, we document that historically oil prices and remittances tend to broadly move in the same direction but that remittances have been much less volatile than oil prices. An analysis of the past large oil price declines shows that remittance flows to major remittance recipients in Mashreq, Pakistan, and Yemen fell only modestly following large declines in oil prices and recovered quickly in line with oil prices. Finally, we estimate the elasticity of remittance outflows with respect to non‐oil GDP in the GCC using various techniques. Estimates of short‐term elasticity vary between 0.5 and 0.8, while estimates of long‐term elasticity vary between 0.6 and 1.1. We find that construction and government services are two non‐oil GDP components that are strongly associated with remittance outflows.
A large theoretical and empirical literature has focused on the impact of fi nancial deepening on economic growth throughout the world. This paper contributes to the literature by investigating whether this impact differs across regions, income levels, and types of economy. Using a rich data set for 150 countries for the period 1975-2005, dynamic panel estimation results suggest that the benefi cial effect of fi nancial deepening on economic growth in fact displays measurable heterogeneity; it is generally smaller in oil exporting countries; in certain regions, such as the Middle East and North Africa (MENA); and in lower-income countries. Further analysis suggests that these differences might be driven by the degree of competition, and related to differences in the ability to provide widespread access to fi nancial services.
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