Type
Article
Title
The macroeconomic effects of migrants’ remittances in Moldova: a stock–flow consistent model
In
European Journal of Economics and Economic Policies Intervention
Author(s)
Editor
US : Edward Elgar Publishing
Volume
16
Number
1
Pages
31 - 54 p.
ISSN
20527764
Keywords
Remittances, Moldova, Stock-flow consistent models, Business cycles, Migration, Volatility
Abstract
EN
Migrants’ remittances are an essential source of income in many developing countries. In this article, we build a post-Keynesian stock–flow consistent model adapted to Moldova, one of the top recipients of remittances. In addition to increasing household consumption, migrants’ transfers have strong effects on economic growth in Moldova. However, remittances are very sensitive to the economic conditions in migrants’ destination countries, especially since the 2008 global financial crisis. After including remittances in consumption behavior and lenders’ risk, we run simulations to show how shocks in migrants’ destination countries (that is, Europe and Russia) impact the Moldovan economy through fluctuations in remittances. First, the increasing instability of remittances explains a significant portion of the economic volatility experienced by Moldova. Second, the high level of imports implies a weak multiplier effect of remittances, leading to an unsustainable pattern of growth.

BIBLIOGRAPHIC QUOTE
EXPORT