Working Paper Series: Special Edition of 2016 to 2018 Interns

Remittances and Economic Growth in Floating and Fixed Exchange Rate Economies: The Case of Latin America and the Caribbean

by Mr Durronjae` Boothe University of the West Indies Mona Campus

Abstract This paper examines the causal relationship between remittances and exchange rate regime, assessing their impact on per capita GDP growth using a strongly balanced panel for thirty-two of the independent countries in Latin America and the Caribbean, over a 4-year period from 2000- 2015. Using the system Generalized Method of Moments (SGMM) estimation technique developed by Arellano and Bover (1995) and Blundell and Bond (1998) in the panel data analysis, the major conclusions drawn from the results indicate that remittances inflow to Latin America and the Caribbean exhibit counter-cyclical properties. Results from study also indicate that remittances estimates being negative exudes a greater negative impact in floating exchange rate economies. JEL Code : C23, F3, Keywords: Remittances, Latin America, Caribbean, GMM

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