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Microeconomic Implications of Remittances in an Overlapping Generations Model with Altruism and Self-Interest, Tigran Melkonyan, David Grigorian

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Microeconomic Implications of Remittances in an Overlapping Generations Model with Altruism and Self-Interest, Tigran Melkonyan, David Grigorian
Language
eng
Abstract
The paper explicitly models the dynamic strategic aspects of the interaction between the migrant and the remittance-receiving relative(s), with the migrant behaving as a Stackelberg leader. It is also different from other formalizations of remittance behavior in its treatment of the two parties' interaction to realize potential gains from exchange. We demonstrate that when the migrant and the relative(s) cooperate to maximize the joint utility of the household, this leads to higher level of remittances as well as investment and hours worked by the relative(s). We use data from Armenia to test our predictions regarding implications of remittances flows on behavior of receiving households. Consistent with our predictions, remittance-receiving households work fewer hours and spend less on the education of their children. While saving more, these households are not leveraging their savings to borrow from the banking system to expand their business activities. This evidence suggests that the benefits of remittances might be overstated and emphasizes the importance of measuring their impact in a general- rather than a partial-equilibrium context
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Includes bibliographical references
resource.governmentPublication
international or intergovernmental publication
Literary Form
non fiction
Main title
Microeconomic Implications of Remittances in an Overlapping Generations Model with Altruism and Self-Interest
Nature of contents
dictionaries
Responsibility statement
Tigran Melkonyan, David Grigorian
Series statement
IMF Working Papers
Table Of Contents
Contents; I. Introduction; II. Review of the Literature; A. Incentives to Remit; B. Empirical Determinants of Remittances; C. Impact of Remittances; III. Theoretical Considerations; A. Contrast with the Existing Approaches; B. The Model; C. Comparative Statics; Tables; 1. Comparative Statics Under First- and Second-Best Options; Figures; 1. Difference Between Equilibrium Values of Key Endogenous Indicators Across Two Models as a Function of Selfishness; IV. Empirical Estimation; A. Background and Data Description; 2. Impact of Time Away on Remittance Behavior; B. Baseline Regression2. Results of the First and Second Stage Regressions3. Results of the Third Stage Regressions; V. Conclusions; Appendixes; Appendix I; Appendix II; References
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